The private equity (PE) and venture capital (VC) investments in April crossed $2 billion across 63 deals for the second consecutive month in 2017. However, there was a decline of 8 per cent and 24 per cent in value terms compared with April 2016 and March 2017, respectively, according to a study by EY.
In terms of volume, it increased by 29 per cent and 5 per cent over April 2016 and March 2017, respectively. There were 7 deals greater than $100 million, accounting for almost 59 per cent of aggregate deal value ($906 million) in April 2017, compared with three ($885 million) in April 2016 and four ($173 million) in the previous month.
Despite a significant number of large deals (more than $100 million) the aggregate deal value declined in April 2017 on account of a fewer number of mid-sized deals in the range of $20 million-$50 million. In the mid-size segment, there were two deals worth US$61 million in April 2017 compared to 11 deals worth $387 million in April 2016 and eight deals worth $270 million in the previous month.
“April was another strong month both for PE investments and exits. Buyouts have clearly been the standout highlight of the year and we see buyout activity only get stronger with time. The PE model is slowly but surely moving towards value creation and it bodes well for India at large. This helps creating stronger, more competitive businesses leading to a number of collateral benefits such as capacity building, skill development, greater job creation, and improved tax revenues etc. India has been a relatively longer gestation market and the Pension fund capital and buyout capital which tends to address that need is leading to improved deal velocity and investment numbers,” Mayank Rastogi, Partner and Leader for PE, EY said.
Buyouts accounted for 45 per cent of the total deal value with $906 million recorded across six deals. The buyout scenario has been progressively improving in India over the past five years. The number of buyouts so far in 2017 (14 deals) has already reached the 50 per cent mark of the numbers that were recorded for all of last year.
The top buyout deals include Capital Square Partners’ $275 million buyout of Aegis from Essar, Macquarie’s $250 million buyout of Hindustan Powerprojects, True Norths and co-investor’s $200 million investment in Religare Health Insurance Company for an 80 per cent stake, Kedaara Capital and Ontario Teachers Pension Plan investment of $100 million in the microfinance company Spandana Sphoorty Financial for a majority stake.
From a sector perspective, Financial Services ($316 million across nine deals) led the activity, followed by Technology with ($306 million across 15 deals). Real Estate recorded one deal with CPPIB investing $111 million in Island Star Mall Developers (Phoenix group) for a mix use project. E-commerce recorded a large deal after a long time with Softbank investing $250 million in OYO rooms.