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Buoyant on large deals, private equity and venture capital (PE/VC) investments totalled $25.2 billion in 2018 till October-end this year, while exits closely followed at $24 billion. The investments during the reporting period fell $1 billion short of the last year’s, according to an EY report.
According to EY’s Private Equity monthly Deal Tracker, a number of large deals in both investments and exits have contributed to the “strong performance”.
“While PE/VC deal activity in the third quarter of 2018 (3Q2018) was weak, the strong start to the fourth quarter (4Q2018) is encouraging. Despite the under performance in open market exits, PE/VC exit activity continues to remain robust with support from strategic and secondary deals,” said Vivek Soni, Partner and National Leader Private Equity Services, EY. “In the short-term, we expect investors to be more circumspect than the beginning of the year.
Increased uncertainty on account volatility in crude oil prices, depreciating rupee, talk of trade wars, the current liquidity related issues attributed to the NBFC sector and other factors has driven up business risk premium,” he added.
Investments
After a weak third quarter, October 2018 recorded $3.1 billion in PE/VC investments, 50 per cent higher compared with the same period last year, on the back of six large deals (value greater than $100 million) accounting for 78 per cent of investments during the month.
The largest deal during the month saw Warburg, Temasek, Softbank and a few other investors invest $1.3 billion in the Africa business of Bharti Airtel for a 28.4 per cent stake. Other deals included Xander’s $350 million buyout of Phoenix’s Hyderabad office project and Advent’s $326 million buyout of Manjushree Technopack. With these investments, the total PE/VC investments in 2018 till October amount to $25.2 billion, which is just under a billion dollars shy of surpassing the previous year’s record.
Exits in October 2018 at $1.4 billion were more than twice the value recorded in October 2017, mainly on account of the large $1 billion Blackstone-Intelenet Global deal. This follows the weak performance in September 2018, which recorded $29 million in exits apart from the large $16 billion Walmart-Flipkart deal.
Exits in 2018 till date aggregate $24 billion, almost on par with the value of investments year-to-date.
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