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BSE-listed SKS Microfinance is back in the news again, this time on speculation that Catamaran Ventures, the NR Narayana Murthy-promoted venture capital fund, may exit the company soon. The story broke this afternoon on CNBC-TV 18, which reports, quoting sources, that the Catamaran board took the decision to exit the Hyderabad-based microfinance institution in the last two weeks — read the original story at Moneycontrol.

The Bangalore-based Catamaran currently owns a 1.3 per cent stake in SKS. It had originally bought a 1.5 per cent stake in January 2010 for an investment of Rs 28 crore. SKS had issued the shares to Catamaran at Rs 300 per share, just a few months ahead of its initial public offering in August 2010. The company’s stock listed at Rs 1,036 (against an offer price of Rs 985) and it went on to raise over Rs 1,600 crore from the public markets.

This is not the first time in recent months that speculation about Catamaran’s imminent exit from SKS has hit the headlines. In September, The Financial Express, again quoting sources, reported that the venture capital firm was mulling a stake sellout. The root of the speculation, then and now, appears to be the soon-to-expire lock-in period for Catamaran’s holding in the microfinance institution. Contractually, Catamaran’s shares were locked in for 24 months from the time of the investment. The lock-in period officially expires in January, though the venture capital firm could have exited even earlier — as per its shareholder agreement with SKS, the lock-in would become invalid if the weekly average closing price of the SKS stock fell below Rs 400, which it did this May.

For SKS, the speculated stake sale by Catamaran comes at the end of what has been a particularly troubled year. The company’s stock has declined drastically from its spectacular listing price to around Rs 100 now. Founder and chairman Vikram Akula recently resigned from the company, ostensibly to pursue a fresh entrepreneurial venture in the area of mobile banking. The company is also in the red, posting losses of Rs 384.54 crore for the quarter ended September.

The Catamaran exit, if it happens, will further dent the company’s already battered credibility with both retail and institutional investors. It could also set off an exodus of SKS’ remaining venture capital backers, which includes WestBridge Capital Partners, Sequoia Capital India, Silicon Valley serial entrepreneur and investor Vinod Khosla and Sandstone Capital — though the company has recently said that its existing investors have shown interest in participating in an upcoming QIP (qualified institutional placement).

Reliance Venture Asset Management, the corporate venture capital investment arm of the Anil Ambani-promoted Reliance Group, has scripted its second exit in less than a month. It has exited its investment in French 4G chipmaker Sequans Communications which listed on NYSE on Friday at $10 per share. Details of the original investment amount are not publicly available. However, wire agency reports quote sources putting returns at almost three times the original investment.

Paris-based Sequans is the first French company to list on the NYSE since 2002. It raised $177 million in gross proceeds on listing and is traded under the symbol NYSE: SQNS. Reliance Venture had invested in the company in 2007 alongside a posse of investors including Alcatel Lucent, Motorola and CDC Enterprises. “We are open to discussing financial information after observing a limited quiet period for 25 days after the IPO,” said Harshal Shah, CEO of Reliance Venture, in a press release.

In late March the firm exited Hyderabad-based climate control apparel startup Dhama Apparel Innovations, earning an IRR exceeding 100 per cent on the sale of its 45 per cent stake. It is currently in talks with several portfolio companies on further exits. Some of the firm’s recent investments include AllGreen Energy, Gradatim IT Ventures, Tessolve Services and Reverse Logistics. One of its earliest startup investments is online travel portal Yatra, in which it was a founding investor.

What others are saying about the deal

• Reliance Venture exits 4G chipmaker Sequans (Economic Times)

The first quarter venture capital investment numbers by US investors are out from the MoneyTree report compiled by PricewaterhouseCoopers and NVCA, based on data from Thomson Reuters. Venture capitalists invested $5.9 billion across 736 deals. This represents a 15.6 per cent growth from the $5.1 billion invested in the first three months of 2010 across 787 deals.

Some highlights from the report:

• Software received the highest funding at $1.1 billion
• Biotech came in third raising $784 million
• Cleantech saw a 26 per cent growth in investments over the December 201o quarter at $1 billion
• Series A investments increased 12 per cent over the December quarter raising $987 million across 221 deals

NVCA also earlier released the first quarter numbers for venture capital fundraising and exits. A total of 36 funds raised $7 billion which represents a 74 per cent growth over the first quarter of 2010. This included 25 follow-on funds and 11 new ones. The big three fund raisers were the $1.6 billion Bessemer Venture Partners VIII fund, the $1.3 billion Sequoia Capital 2010 LP and the $1.2 billion JP Morgan Digital Growth Fund LP. This marks the return of billion dollar funds after a slow fundraising phase in the last couple of years.

On the exits front, 14 venture capital-backed IPOs valued at $1.4 billion entered the market in the first quarter. 109 venture capital-backed M&A deals were reported of which 45 had an aggregate deal value of $5.9 billion. The NVCA thinks that a 20-30 per cent increase in US venture capital-backed firms going public this year is a reasonable goal.

The first quarter performance reports can be downloaded from the NVCA website.

Image Courtesy: Danilo Rizzuti/Free Digital Photos.net

Intel Capital has exited its investment in Pune-based Persistent Systems, reports Business Line. It has sold the second and remaining trance of its stake in the company. On April 13 the venture capital investor sold its remaining 2.29 per cent in the company in an open market deal for $8.1 million, said the report.

In April 2000, Intel Capital had acquired a total stake of 3.66 per cent in Persistent for an investment of $1 million. It sold 1.37 per cent early last year shortly after the company went public. Apart from Intel Capital, the other venture capital investors on board at Persistent include Norwest Venture Partners and Gabriel Venture Partners who own 13.5 per cent and 4.8 per cent respectively. Hewlett-Packard is also an investor in the company.

Founded by former Hewlett-Packard executive Anand Deshpande in 1990, Persistent provides outsourced software product development services to overseas customers. The company currently employs over 5000 people and has a portfolio of over 290 customers.

What others are saying about the deal

• Intel Capital exits Persistent Systems, returns pegged at 6X (VCCircle)

Image Courtesy: Persistent Systems

A bunch of independent research reports are out on worldwide venture capital and private equity activity during the April to June quarter of 2009. Overall, fundraising and investment levels continue to be depressed, compared to the same period in 2008. But, the second quarter numbers mark some improvement over the January to March 2009 quarter.

• The National Venture Capital Association (NVCA) reports that venture capital exits in the US market have shown “mild improvement”. Initial public offerings (IPO), the preferred exit route for venture capital investors, have made a small comeback. Five venture-backed companies hit the capital markets to raise $720.7 million in the April to June 2009 quarter. This is a significant improvement over the full year 2008, which saw only six IPOs worth $470.2 million. More details in the NVCA release here.
• Preqin reports $76 billion in global private equity (includes venture capital) fundraising during the April to June 2009 quarter. This is a 28% growth over the $60 billion raised in the January to March 2009 quarter. However, compared to the $213 billion raised in the April to June 2008 quarter, it is still a steep climb up to normal levels. Full details in the Preqin release here.
• PitchBook reports global private equity investments (does not include venture capital) at $11.11 billion in the April to June 2009 quarter, down 18.5% from $13.64 billion in the January to March 2009 quarter. The research firm concludes that investors are still waiting for the investment environment to improve. It estimates that investors are sitting on $400 billion in available funds. Details in the PitchBook release here.