Mumbai: The second quarter (April to June) of calendar year 2016 has again given a strong push to Indian private equity (PE). The Q2 ’16 has seen investments worth 4.3 billion USD in 147 deals. The average deal size for this quarter was 29.1 million USD.
As compared to Q1 of CY 16 when the investments were 4.2 billion USD in 186 deals there has been a 2% increase in value terms despite deal volume decreasing by 21%. In Q2 ’15, PE investments stood at 6.0 billion USD through 186 deals.
These findings are part of the PwC MoneyTree™ India report, a quarterly study of private equity investment activity based on data provided by Venture Intelligence.
Despite a weak show by e-commerce investments the information technology & IT-enabled services (IT & ITeS) sector continued its dominance. While the investment flow of 1.6 billion USD in 92 deals was 17% higher than Q1 of the year in value terms, there was an 11% drop in terms of volume. However, the value reflects a 14% drop as compared to the year-ago period. The banking, financial services & insurance sector (BFSI) again secured the second position, attracting 769 million USD, a 25% decline as compared to the previous quarter and a 14% surge as compared with the year-ago period. With just two deals, the energy sector attracted 730 million USD.
Sanjeev Krishan, Leader, Private Equity, PwC India said, “The outlook remains positive as India remains firm on its growth agenda. The IT sector continued its dominance with investments of 1.6 billion USD, primarily led by the 1.1 billion USD buyout of Mphasis by Blackstone. Financial services continues to be a favoured sector among growth/late-stage growth investors. Non-banking financial companies, microfinance and fintech continue to witness significant interest. Logistics and consumer could contribute to investment growth in the second half of the year with GST having the potential to spur logistics deals.”
Sandeep Ladda, Leader, Technology, PwC India said, “Mergers and acquisitions (M&As) in the technology sector have boomed over last few months--from megamergers to small-scale transactions. The e-commerce industry is poised for consolidation and is likely to witness a series of M&As this year. Recurring trends of transformation, consolidation and investments in emerging technologies continue to demonstrate the rapid evolution within the technology industry, which is also seeing increasing interest in digital assets from non-digital buyers. Going forward, we expect a gradual increase in deal activity as the year progresses.”
The Q2’ 16 has seen six buyouts worth 1.6 billion USD, and the PE appetite continued to be strong, with late-stage investments worth 1.2 billion USD in 25 deals. The drought in early-stage investments continued in this quarter, with just 183 million USD in 74 deals.
From a regional standpoint, interestingly, in this quarter, except Bengaluru and Mumbai, none of the other regions in the country attracted many PE investors.
Private Equity Exits
PE exits in the second quarter of 2016 were among the lowest in recent history, with 1.2 billion USD in 40 deals. This is a 54% drop as compared to the previous quarter (2.6 billion USD in 39 deals) and a 70% drop from Q2 ’15 (4.0 billion USD in 71 deals).
With five exit deals worth 465 million USD, the BFSI sector has emerged at the top, followed by telecom with 206 million in one deal. IT sector saw exits worth 173 million USD in 14 deals.
The public market has become the most preferred route for exits this quarter, with a total exit value of 713 million USD in 17 deals. Strategic sales followed, with a total exit value of 216 million USD in 16 deals and secondaries worth 214 million USD in five deals.
There were four PE-backed IPOs with a total IPO value of 641 million USD.
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