VOLATILE capital markets coupled with high valuations have resulted in almost 67% of the private investments in public enterprises (PIPE) deals in 2007 ending in the red. PIPE deals are investments made by private equity funds in publicly-listed companies, usually through preferential allotments.

1. MUMBAI: VOLATILE capital markets coupled with high valuations have resulted in almost
67% of the private investments in public enterprises (PIPE) deals in 2007 ending in the red.
PIPE deals are investments made by private equity funds in publicly-listed companies,
usually through preferential allotments. Industry experts maintain that sustained downtrend
and uncertain market conditions of 2008 have pushed the overall till-date (as on June 10)
return on PIPE deals of 2007 (on volume basis) to -5.81%.
“This can largely be attributed to two things,” said Jagannadham Thunuguntla, equity head
of NEXGEN Capitals. “One, entry valuations were on the higher side and two, under-
performance of capital markets on the backdrop of fast changing global/Indian macro
factors. Also let us keep in mind the fact that the investments happened at the fag end of a
bull market and we are looking at valuations at what seems to be the beginning of the bear
market,” he added. In contrast, a quick