Comments
Buoyed by an improvement in deal activity in listed securities, private equity and venture capital (PE/VC) investments recorded a 51 per cent year-on-year increase to $2.6 billion in February. This also represents a 41 per cent rise compared with the previous month, according to a report by EY.
“After a relatively subdued start to the year, February 2019 has been a good month, recording a strong performance in both investments and exits. As market volatility has reduced, both PE/VC investments and exits in listed companies have bounced back,” said Vivek Soni, Partner and National Leader-Private Equity Services at EY.
With large investments by Softbank and buyouts by funds such as Blackstone, True North and AION, the appetite of PE/VC funds for deals appears to be strong, notwithstanding prevailing uncertainties around global growth and the impending general elections in India. Underlying deal activity remains robust across large and mid-sized deals, although valuations appear to have corrected for many sectors compared with the pre-September 2018 levels.
“We think 2019 could well be one of the best for Indian PE/VC investments,” added Soni.
The growth was driven by a higher number of large deals ( value greater than $100 million), with the reporting month recording nine large deals of $1.8 billion, compared with four large deals of $655 million in February 2018. This is also higher than large deals worth $1 billion recorded in January 2019.
SoftBank and Carlyle’s $415-million investment in Delhivery was the largest deal in February 2019, and also the largest PE/VC deal in the logistics sector ever, the study said.
Based on the type of investments, growth investments at $1.2 billion were up by 27 per cent compared with February 2018. Private investment in public equity (PIPE) recorded a rebound in February 2019, emerging from a four-year low of $2.8 million recorded in January 2019. At $431 million, PIPE in February 2019 was the highest in the past eight months. The reporting month also recorded two buyouts worth $262 million, compared with four buyouts worth $273 million in February 2018. Start-up investments in February 2019, at $156 million across 32 deals, were 52 per cent lower compared with $325 million recorded across 31 deals in February 2018. Credit investments in February 2019, at $548 million, were the highest in the previous 12 months, on the back of the $350-million debt funding of ReNew Power by Overseas Private Investment Corporation (OPIC), the US government’s development finance institution.
From a sector point of view, financial services ($712 million across 13 deals in February 2019 vs $619 million across 13 deals in February 2018) topped the list, followed by logistics ($470 million across four deals in February 2019 vs one deal of $2 million in February 2018), which recorded its highest-ever monthly investment on the back of the large investment in Delhivery. E-commerce ($35 million across five deals in February 2019 vs $362 million across nine deals in February 2018), which is generally among the top sectors, recorded a sharp decline in deal value.
Open-market exits
Exits in February at $472 million were almost three times the value recorded in February 2018. This comes on the back of a rebound in open market exits in the wake of subsiding volatility in the stock markets. There were four open market exits in February 2019 worth $351 million, more than three times the value recorded in February 2018 and the highest in the past six months. There was one PE-backed IPO in February 2019 that saw Goldman Sachs and Kuwait Investment Authority-backed Chalet Hotels Ltd list on the bourses. The largest exit in February 2019 saw Bain Capital and GIC sell 5 per cent stake in Genpact for $324 million.
From a sector perspective, technology was on top, primarily on account of the Genpact deal.
Fundraising success
The reporting month also saw funds worth $285 million being raised and fund raise plans worth $779 million being announced. The $250-million raised by India Life Sciences for its third fund was the largest fundraise in February 2019.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.