PE firms invested over 1 billion USD across 82 deals in Q4 ’12. The quarterly PE investments decreased by 74% in terms of value, while the deal volume decreased by 24%, as compared to the previous quarter.
With 30 deals worth 167 million USD in Q4 ’12, the information technology (IT) and IT-enabled services (ITeS) sector is the leader in value as well as volume.
The IT and ITeS sector has seen the highest level of PE funding and number of deals in this quarter.
The education, shipping & logistics, and textiles & garments sectors have shown a spurt in investments, both in value and volume.
The education sector recorded eight deals totalling 55 million USD.
The exit activity in this quarter has grown over four times in value despite a 20% decline in volume as compared to the previous quarter.
In Q4 ’12, PE exits were worth 2,024 million USD from 20 deals as compared to Q3 ’12 when PE exits were worth 452 million USD from 25 deals.
Growth in the exit activity can be attributed to two large deals, one each in the BFSI and telecom sectors.
The IT and ITeS sector witnessed a radical drop in investments in Q4 ’12, but still emerged as the leader amongst sectors in both value and volume.
PE investments recorded a 93% drop in investment value, with 167 million USD from 30 deals as compared to the previous quarter investment worth 2.4 billion USD from 50 deals.
As in previous quarters, the IT and ITeS sector saw a lot of early-stage deals of smaller value.
Reformatory steps from the government provided a big fillip to investors’ sentiments during Q4. The revival in the stock markets also helped. Interestingly, this did not reflect in investment from PE funds, either because private equity players are still waiting to be convinced about the government’s real intentions or simply because PE funds were more focused on exits.
In the IT services segment, we have seen investments in mid-tier companies, who primarily have niche service offerings and PE firms are cherry-picking such opportunities. As a corollary, plain vanilla IT services segment may not attract much investments in the near future.