PE investments in India register upswing trend for fifth quarter in a row

Mumbai, 20 November 2014: PE investments in Q3 of CY 14 (Jul -Sep) totaled 3.01 billion USD in value terms across 103 deals.

PE exits in this quarter dropped by 18 percent in terms of value to 1.11 billion USD in 31 exits from 1.35 billion USD (in 56 exits).

The private equity investments in India have recorded an uninterrupted five quarter upswing with a 3.01 billion USD investment in Q3 ‘14 (July to September 2014). This investment was done across 103 deals, registering a growth of 4 percent in value over the preceeding quarter with a 3 percent drop in volume. In the previous quarter (April - July 2014), 2.91 billion USD was invested in 106 deals. The findings are part of the PwC MoneyTree™ India report, a quarterly study of private equity investment activity based on data provided by Venture Intelligence.

Compared against the same period last year, i.e., Q3 ’13, the value of deals rose by 97 percent despite a 9 percent reduction in volume. In Q3 ’13, the value of investments were 1.53 billion USD from 113 deals.

The IT & IT-enabled services (ITeS) sector has bounced back as the leading sector, attracting 1.64 billion USD in 56 deals. It is more than a two fold jump as compared to Q2 ‘14 and two and a half times higher than Q3 ‘13. In the previous quarter, the sector attracted 746 million USD in 47 deals, while during the third quarter of last year, it saw 618 million USD in 41 deals.

Sandeep Ladda, leader, Technology, PwC India said, “India's overall retail opportunity is substantial, and coupled with favoured demographics (young population, rising standards of living and upwardly mobile middle class) and growing internet user base, strong growth in eCommerce market is expected. Growth has been driven by advancements in technology – increasing adoption of devices like smartphones and tablets, and easy access to the internet has led to increase in online consumer base. The eCommerce businesses will continue to attract investor interest driven by strong growth prospects of the market.”

Sanjeev Krishan, leader, Private Equity, PwC India said, "The overall market sentiment is positive with a strong and clear intent from the government on liberalisation and easing doing business in India. This is further aided by favourable macros with declining global commodity prices and declining domestic inflation. Combined with the enhanced interest in public markets, we also anticipate global strategic investors to look at India with heightened interest, in effect providing multiple routes for both capital raising and exits".

As per the report, the healthcare & life sciences sector emerged second in terms of investment value with investments totalling 292 million USD in 11 deals, a 45 percent decline as compared to the previous quarter’s 526 million USD from 12 deals. In Q3 ’13, the investments in this sector were 196 million USD from 16 deals.

The education sector performed remarkably well with highest investment in recent times, 176 million USD in 4 deals, a multifold jump from previous quarters, followed by the manufacturing sector with 147 million USD. The banking and financial sector dropped by 85 percent 10 147 million from 958 million USD in Q2 ’14.

In Q3 ’14, PE investors preferred the growth route as this stage received investments worth 1.8 billion USD in 34 deals. Late stage investments were valued at 857 million USD in 15 deals during this quarter.

In Q3 ’14, PE investors preferred the growth route as this stage received investments worth 1.8 billion USD in 34 deals. Late stage investments were valued at 857 million USD in 15 deals during this quarter.

Bangalore outdid Mumbai and the National Capital Region (NCR) to emerge as the winner in terms of attracting PE investments, with 1.8 billion USD in 29 deals, which is 60 percent of the total deal value for this quarter. NCR was the second best with 409 million USD investment pushing Mumbai to third with 383 million USD. Interestingly, Kutch in Gujarat saw a single investment worth 50 million USD during Q3 ’14.

Private equity exits

The exit activity in the third quarter of 2014 has dropped by 18 percent with a total value of 1.11 billion USD in 31 deals. In the previous quarter this was 1.35 billion USD worth investment from 56 deals, while in Q3 ’13 the total exit value was just 534 million USD in 25 deals.

With a single deal worth 234 million USD, the telecom sector dominated the exit space in this quarter followed by the manufacturing sector (229 million USD in 2 deals).

In this quarter, almost 72 percent of the exits by value have been through public market sale (801 million USD from 20 deals). Exits through strategic sale reported the next highest share, with 144 million USD from seven deals.

Note to editors

  • Information included in this release or related venture capital investment data should be cited in the following way: "PwC's MoneyTree™ India Report with data provided by Venture Intelligence." After the first reference, subsequent references may refer to PwC's MoneyTree India Report. Charts and tables displaying the data are sourced to "PricewaterhouseCoopers India Pvt. Ltd/Venture Intelligence data." After the first reference, subsequent references may refer to PwC MoneyTree India Report. For access to the report, please visit http://www.pwc.com/globalmoneytree.
  • The top 20 deals comprised 78 percent of the total deal value in Q3 ’14. The top four deals constituted 48 percent of the total top 20 deal value. About 84 percent of the deals in this quarter are below the value of 50 million USD.
  • The top two exits comprised 65 percent of the total exit value in Q3 ’14.

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