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India’s Private Equity sector recorded investments worth $1.6 billion across 50 deals in August, with buyout deals rising two-times in value compared with August 2017.
For the year-to-date (January-August), the private equity and venture capital investments till August have crossed $18.7 billion, 9 per cent higher compared to the same period last year according to a study by EY.
The reporting month also recorded $830 million across 18 exits with two $200 million plus deals. While exits in 2018 were $6.7 billion, with the single Walmart-Flipkart deal of $16 billion, exits in 2018 are expected to reach almost two times the total value of exits in 2017.
“Till August end, the sentiment towards India remained strong, with funds further adding to their dry powder, as evidenced by $2 billion raised during the month, adding to the already high levels of dry powder of close to $40 billion available for investment into India,” Vivek Soni, Partner and National Leader Private Equity Services, at EY, said.
“The Indian PE/VC industry appears to have come of age, with PE/VC backed platforms attracting marquee global investors like Berkshire Hathaway, which recently announced an investment of $300-$400 million in Paytm. Exits however, have experienced headwinds given the volatility in the broader markets,” he added.
Investments
The month recorded $1.6 billion in deal value, at par with investments recorded in the previous month, however, this is a 71 per cent drop compared with August 2017. The difference is on account of two mega deals recorded in August 2017—Softbank’s $2.5 billion investment in Flipkart and GIC’s $1.4 billion investment in DLF Cyber City.
In terms of deal volume, investment activity for the month was at par with deals recorded in August last year.
The month also recorded four deals of value greater than $100 million (cumulatively worth $1.1 billion), accounting for 72 per cent of total investments as against $4.7 billion recorded across six deals in August 2017, which include two of the largest PE deals.
KKR’s $530 million buyout of 60 per cent stake in Ramky Enviro Engineers was the largest deal this August, it added.
In terms of stages of investment, buyouts led in terms of value of investments, with four deals worth $683 million, which is more than twice the investments received in same month last year. Expansion and growth deals, which are otherwise the front runners in terms of investment value, recorded just $467 million in investments compared to $4.5 billion recorded in August 2017.
EY reported that start-ups ranked at the top in terms of number of deals (29 deals) made.
From a sector point of view, power and utilities led with $532 million investments across two deals followed by real estate with $360 million invested across two deals. Financial services, which has seen many investments previously, recorded just $42 million in investments across six deals. In terms of number of deals, technology with seven deals was the leader.
Exits
The month recorded 18 exits totalling $830 million, double the value compared with July 2018. However, compared with August last year, exits have declined by 61 per cent in terms of value due to the exit of few big investors in August 2017—Tiger Global’s $800 million exit from Flipkart, Bain Capital and GIC’s $294 million part exit from Genpact and IFC’s $246 million exit from Tikona Digital.
The largest exit in August include $225 million part exit from Ola by Helion Ventures, Accel India, Bessemer and others in a secondary sale to Temasek. The other large exit during the month saw Warburg Pincus sell 8.3 per cent stake in AU Small Finance Bank Limited for $223 million in the open market.
Moreover, the successful closure of the $16 billion Walmart-Flipkart deal in early September would trump all exits in the Indian PE-VC industry and would also eclipse the dollar value of exits in all of 2017.
Open market exits led with deals worth $480 million across eight exits followed by three secondary exits worth $248 million. There was one PE-backed Initial Public Offering (IPO) in August, which saw Micro Ventures exit its stake in Credit Access Grameen Limited for $71 million.
Fund raise
Fund raising plans worth 3 billion were announced in August 2018. The largest fund raise of $695 million was made by Sequoia with a focus on early and growth stage investments in the technology, consumer and healthcare sectors.
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