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The private equity funds remained buoyant in the second quarter of calendar year 2017, with investments worth $6.3 billion across 155 deals.
There was a 51 per cent increase in deal value as compared with the same period last year, with the average deal size for the reporting quarter amounting to around $40.9 million, according to a PwC MoneyTree India report, a quarterly study of PE investment activity based on data provided by Venture Intelligence.
According to the report, the PE appetite continued to be strong with late-stage investments accounting for almost 57 per cent of the investment value at $3.6 billion this quarter, followed by buy-out deals at $0.9 billion. With valuations at an all-time high, Private Investment in Public Equity (PIPE) deals witnessed a 76 per cent decline in terms of value over the previous quarter.
Sanjeev Krishan, Leader, Private Equity, PwC India said: “Investor confidence in India’s growth story continues to be strong with both foreign as well as domestic players tapping into opportunities here. However, the Goods and Services Tax (GST) may impact the investment landscape in the near term, as investors assess the scenario and proceed more carefully.”
Regionally, Mumbai gained an edge over the National Capital Region in Q2 of 2017, with total investments worth around $2.3 billion in 39 deals. With a 70 per cent drop in PE investment value as compared to the last quarter, Bengaluru slid to the third spot.
PE funds also demonstrated renewed confidence in the technology sector with investments worth $2.7 billion, a 93 per cent rise over the same period last year, having recorded the largest deal -- Softbank’s investment of $1.4 billion in One97 Communications.
According to Sandeep Ladda, Global TMT Tax Leader and India Technology Sector Leader, PwC India: “Despite the slowdown in growth in the Indian technology sector and in the midst of layoffs and US visa issues, technology continued to be an important investment theme in the second quarter with IT & ITeS accounting for a large share of overall deal value. As transactions continue to move online, new areas such as FinTech and the hyperlocal and travel segments are set to benefit in the long term.”
Private equity exits
From an exit standpoint, this quarter saw a 13 per cent fall in the value of PE exits compared with the last quarter. In all, there were 61 deals worth about $2.8 billion in comparison to 58 deals worth around $3.2 billion in the previous quarter.
IT and ITeS were the top sectors in terms of PE exits in this quarter as well, with a total of 14 exits worth about $718 million. BFSI and healthcare and life sciences took up the second and third positions, with exits worth around $631 million in 12 deals and $556 million in 11 deals, respectively. The manufacturing sector was a surprise, showing an upward trend in this quarter, enjoying a 237 per cent and 775 per cent increase in exit value in comparison to the previous quarter and year-ago period, respectively.
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