PE investments in India register phenomenal growth in Oct-Dec 2014

• PE investments in Q4 of CY 14 (Oct-Dec) totaled 4.35 billion USD in value terms across 107 deals.
• PE exits dropped by 25 percent in terms of value to 1.02 billion USD in 27 exits.

Mumbai, 26 February 2015: Private equity investments in India witnessed a phenomenal fourth quarter with 4.35 billion USD across 107 deals (Oct- Dec 2014). This is the best performance of the sector since the incredible Q4 ’07 which saw 5.40 billion USD worth of investments. Despite a 9 percent drop in the number of deals compared to the previous quarter, the deal value rose by 55 percent.

In Q3 ’14 (Jul-Sep 2014), 2.82 billion USD was invested in 117 deals. The investment value doubled, in comparison with the same period last year, with just a 4 percent increase in volume. In Q4 ’13 (Oct-Dec 2013), the total investment was 2.21 billion USD across 103 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.

Continuing the trend of the last quarter, the IT & IT-enabled services (IT & ITeS) sector retained the top slot, attracting 2.56 billion USD in 59 deals, which is more than half of the total investments. It represents a 55 percent increase compared with the previous quarter and is nearly three times higher than the investment recorded in the same period last year.

Sandeep Ladda, leader, Technology, PwC India said, “The year 2014 saw one of the highest investments in the IT/ITeS space in the last decade, driven largely by investments in the eCommerce sector.  Marketplaces like Flipkart and Snapdeal led the race, followed by niche companies such as Urban Ladder and OlaCabs. eCommerce is expected to continue the growth trajectory in 2015, with more investments driven by likely improvements in regulatory environment and policy. From an IT/ITeS perspective, as digital evolves, the hybrid cloud become popular, and big data become more mainstream, the industry will face a talent crunch. Furthermore, it is expected by the IT/ITeS and eCommerce companies that the Budget 2015 will address some key industry tax and regulatory issues and create a platform to attract more investments.”

Sanjeev Krishan, Chairperson, PwC in India said, "eCommerce contributed significantly to the surge in the private equity investments during CY2014 and in the last quarter as well. This is expected to continue as eCommerce businesses attempt to keep themselves well capitalised; sectorally, we expect consumer-centric/IT/life sciences businesses to continue to see the exit greater investments in 2015. We also expect a large number of the residual 2006-08 investments to come up for exits this year. At the same time, investors continue to look for real reforms and on the ground movement. This could be key to the sustenance of the momentum being witnessed at the moment."

As per the report, the banking and financial sector’s (BFSI’s) stellar performance during the fourth quarter has made it the second best attraction. With a total investment of 563 million USD, it recorded a two-fold jump from the previous quarter.

The energy sector received investments valued at 481 million USD in just six deals, a 75 percent increase from the previous quarter (275 million USD from 11 deals) and a nine-fold increase from the same period last year (52 million USD from three deals). Both the gems and jewellery and food and beverages sectors sprung a few surprises in the last quarter with their healthy performance. These sectors received investments worth 213 million USD (two deals) and 117 million USD (three deals) respectively.

Late-stage investments outperformed growth-stage investments, receiving a total of 2.91 billion USD compared to the 934 million USD worth of investments in growth-stage deals.

Mumbai made a comeback to the top slot with regard t0 PE investments—both by value and volume of deals—in this quarter with investments of 1.01 billion USD from 29 deals. Interestingly, smaller cities such as Thrissur in Kerala and Jaipur in Rajasthan hogged the limelight with 200 million USD from one deal and 112 million USD from two deals, respectively.

Private equity exits

The declining exit activity has raised concerns for the upcoming quarters as the exit in Q4 ’14 plummeted 25 percent to 1.02 billion USD in 27 deals, as compared to the previous quarter which saw 1.35 billion USD worth of exits in 40 deals. During the same period last year, the total exit value was 1.28 billion USD in 31 deals.

The manufacturing sector dominated the exit space this quarter with four deals worth 410 million USD followed by the IT & ITeS sector with 354 million USD in nine deals.

Fifty percent of the total exits happened through public market deals valued at 506 million USD across 11 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.
• The top 20 deals comprised 78 percent of the total deal value in Q4 ’14. The top four deals constituted 48 percent of the total deal value. About 84 percent of the deals in this quarter are below the value of 50 million USD.
• The top five exits comprised 60 percent of the total exit value in Q4 ’14.

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