PE investments in India grow by 15 percent in Q1 2015

PE investments in India grow by 15 percent in Q1 2015

  • PE investments in Q1 of CY 15 (Jan- March) totaled 2.8 billion USD in value terms across 130 deals.
  • PE exits 3 times higher in value terms at 1.14 billion USD in 40 deals

Mumbai, 3 June 2015 – The January-March 2015 quarter has become the best performing first quarter after 2011, with 2.8 billion USD across 130 deals. Compared to the same period in 2014 the value surged by 15 percent despite a 10 percent drop in volume (144 deals worth 2.42 billion USD). But it’s a 37 percent drop in value when compared to the previous quarter (October to December 2014) at 4.39 billion USD in 117 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.

The banking and financial sector (BFSI) topped the list with 891 million USD in 14 deals displacing the IT/ITeS sector to second slot. For BFSI, it marks an 83 percent increase from previous quarter and over 8 times from the same period last year ago. In the previous quarter, 488 million USD was invested in this sector from 10 deals while it was just 107 million USD in 11 deals in Q1 of CY14.

Sanjeev Krishan, Private Equity leader, PwC India said, Recent IMF and World Bank projections that the Indian economy will grow faster than China this year and in the next few years, is expected to boost investor sentiment and should result in higher allocations for India. This will however, need to be backed by an improving domestic corporate earnings and favourable macros like a declining interest rate and continued low inflation environment".

Sandeep Ladda, Technology leader, PwC India said, “India continues to consolidate its position as the global hub for the IT/ITeS industry, by developing capabilities around traditional and emerging markets, expanding delivery capabilities and increasing focus on high value services for product development and technology incubation. The new government's focus on technology enabled growth through the ‘Digital India’ and ‘Make in India’ campaigns has significantly boosted overall market prospects and investor sentiment. Growing demand for IT from the small and medium-sized businesses (SMB) segment, especially in emerging markets, has also fuelled growth”.

As per the report, the IT and IT-enabled services (ITeS) sector attracted 836 million USD investment in 71 deals, almost a 68 percent drop from the previous quarter’s 2.65 billion USD and a 14 percent drop from the 969 million USD of same period last year.

Healthcare and Lifesciences has made a comeback with 392 million USD worth investments in just 9 deals, which is almost a four times increase as compared to previous quarter (11o million USD) and the same period last year (100 million USD). Energy sector has witnessed deals worth 207 million USD, which is down 57 percent from the previous quarter’s 481 million USD, but more than doubled as compared to the first quarter of 2014.

Late-stage investment continued to be the preferred investment route over growth investments, with the former receiving 1.26 billion USD investment in 29 deals. While growth investment saw 704 million USD during this period in 29 deals, buyout deals attracted 296 million USD in 3 deals.

Bangalore once again has become the dearest investment destination with 715 million USD worth investments in 35 deals. While the National Capital Region (NCR) has received 691 million USD in 33 deals, Mumbai got pushed to third slot with 623 million USD investments in 26 deals. Unlike other quarters, Kolkata sprung a surprise with 351 million USD in just 4 deals.

Private equity exits

As compared to January – March 2014, the exit activity of the said quarter is 3 times higher at 1.14 billion USD in 40 deals against 470 million USD of exit value (27 deals), but marginally lower than the previous quarter’s 1.17 billion USD in 39 deals. Overall exit activities remain sluggish and the trend is unlikely to change anytime sooner unless some big secondary sales happen.

BFSI sector has outshined others with 472 million USD worth exits in 7 deals while IT/ITeS Sector has seen exits worth 232 million USD.

Almost fifty per cent of the total exits happened through strategic deals valued at 584 million USD across 12 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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