Canada’s largest fund manager CPP Investments (CPPIB) recently shelved its plans to sell a 50% stake in its logistics joint venture with IndoSpace despite getting bids from marquee global investors such as Mubadala and Dutch pension fund manager APG. The decision was reportedly due to a mismatch between the fund manager’s expectations and the bids it got. According to sources, there was a 10-15% difference between the ask and bid price, though this could not be independently verified.
Asia Pacific-focused developer ESR and German investor Allianz, which were looking to sell stakes in their warehousing platform, also called off the deal after facing a similar mismatch, sources said.
These are not just two stray cases, said top investment bankers and PE funds. About 80-85% of private equity (PE) deals which originated this year have fallen through, they said. In comparison, during 2021-2022, out of the 100 deals that originated, 80 were closed.
M&A deals also seem to have taken a hit, with only around 30-40% of the proposed having seen closure this year.
Qatar’s Nebras Power was supposed to acquire up to a 49% stake in Aditya Birla Group’s renewable energy business for nearly $400 million (Rs 3,320 crore). But the deal has been put on hold due to a valuation mismatch, sources said.
In another instance, Adani Enterprises withdrew its plan last month to demerge its 43.94% stake in Adani Wilmar and end its JV with Singapore-based Wilmar International, which also has a 43.94% stake in the company. While the Adani Group had said it was opting out of the demerger scheme to focus on reducing its minimum public shareholding requirement to 75% from 87.9% now, sources said the real reason for cancelling the demerger was linked in part to a valuation mismatch of its FMCG business, which had been put on the block in 2023.
The Adani Group had reportedly spoken to a number of FMCG and PE players in a bid to offload its nearly 44% stake in the JV, but its plans came a cropper due to a mismatch in pricing and valuations mismatch between the buyers and the seller. The Adani Group was hoping to get a valuation of $4 billion for its stake, but prospective buyers were ready to offer far less, according to sources.
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