Mumbai, 11 December 2015 – The third quarter (July-September) has been an amazing quarter for Indian private equity (PE). 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. The Q3 of 2015 surpassed Q4 of 2007, which had been the best thus far with investments of 5.4 billion USD in 179 deals.
The first three quarters of 2015 together attracted 13.8 billion USD, which is an all-time record.
The third quarter has seen investments doubling compared to the same period last year and a 36% increase as compared to the previous quarter. The Q3 ’14 investment inflow was 2.9 billion USD in 134 deals, whereas Q2 ’15 saw investments of 4.5 billion USD in 159 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.
The information technology (IT) and IT-enabled services (ITeS) sector continued to make headlines with bigger deals, comprising 58% of the total deal value—3.6 billion USD from 112 deals, which is 91% higher than the deal value of the previous quarter and more than double that of the year-ago period. The energy sector, which was a distant second, attracted 549 million USD in seven deals, while a single deal in telecom brought the sector to the limelight with a 500-million USD investment. Late-stage investments have continued to perform well and attracted 2.4 billion USD, while the market saw buyouts worth 1.5 billion USD.
Bangalore beat out Mumbai by a narrow margin in terms of geography, with investments worth 1.8 billion USD. Mumbai, in comparison, attracted 1.7 billion USD.
Sandeep Ladda, leader - Technology, PwC India said, “‘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."
Sanjeev Krishan, leader, Private Equity, PwC India said, “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".
Private equity exits
After a second quarter of ‘super exits’, which saw exits worth 3.8 billion USD in 67 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, however 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 financial sector saw exits worth 298 million USD, a 40% drop from Q2 ’15. Further, the energy sector benefitted from five exits which together were worth 136 million USD, compared to just 12 million USD in the previous quarter.
In July to September quarter, secondary sales raced past others as the favorite exit route, with a total value of 661 million USD. On the other hand, strategic sales saw exits worth 536 million USD.
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