With investments worth 6.1 billion USD in 184 deals, the third quarter of 2015 stands as the best-ever quarter in the history of Indian PE.
Q3 of 2015 surpassed Q4 of 2007, which had been the best thus far, with investments of 5.4 billion USD in 179 deals.
In Q3 '15, total investment inflows reached 6.0 billion USD across 159 deals—the best quarter in the history of Indian PE (compared to the investments worth 5.4 billion USD across 184 deals in Q4 2007).
This was made possible by sustained interest in e-commerce within the information technology (IT) & IT-enabled services (ITeS) sector, which alone saw 3.6 billion USD of investments across 112 deals.
Investments in the IT sector comprised 58% of the total deal value—3.6 billion USD from 112 deals—i.e. 91% higher as compared to the previous quarter and more than double the value in the year-ago period.
The energy sector is a distant second, with investments of 549 million USD from seven deals. This figure is 49% higher than the previous quarter’s 369 million USD in 8 deals and 70% higher than the year-ago period, which saw investments worth 323 million USD in 13 deals.
The third quarter of the year disappointed with exits worth 1.6 billion USD in 48 deals. This is a 58% drop from the previous quarter and marks a 25% surge as compared to Q3 ’14, which saw exits worth 1.3 billion USD.
With just two deals, telecom outshined other sectors in exits with a deal value of 500 million USD, which is 85% higher than previous quarter’s 271 million USD.
The development of a new breed of start-ups in India, especially in the e-commerce and e-tail segments, over the past three to four years has raised the interest of overseas investors.
Improvements in available infrastructure and increasing government support will help drive interest in India as a potential centre for technology innovation.
“The government’s commitment to growth and actions on reforms is expected to keep the India story positive. The central bank’s decision to revise the interest rate downward will only provide a better platform for industries. With worldwide anxiety around China’s economy slowing and commodity prices not likely to see significant improvement in the foreseeable future, the next few quarters (years) can only lead to heightened interest from all investors in Indian assets."
- Sanjeev Krishan
Leader, Private Equity, PwC India
“The technology sector has once again emerged as the leader in terms of value and volume of investments, with e-commerce leading the pack. More than 3.5 billion USD was raised in this quarter, which is more than double the amount in the same period of the previous year. Several VCs raised new funds over the last few months, which led to faster deployment and boosted early-stage deals. In terms of segments, hyperlocal and mobile value-added services (VAS) companies saw significant traction. Given the Modi government’s objectives of enabling a start-up ecosystem in India through the ‘Digital India’ and ‘Start-up India, Stand up India’ campaigns, we expect exciting times ahead for the tech community."