PE/VC investments cross US$2 billion for the second consecutive month, exits record a 270% increase in value in April 2017: EY
New Delhi, 11 May 2017
- PE/VC investments record US$2 billion across 63 deals, cross the US$2 billion mark for the second consecutive month
- Buyouts activity strong, accounting for 45% of the total deal value in April 2017 at US$906 million across six deals
- PE/VC exits record US$1 billion across 31 deals, crossing the US$1 billion mark for the second time in the past one year Exits in 2017 now total US$3 billion, 46% of the aggregate value recorded in 2016
New Delhi, 11 May 2017: PE/VC investments in April 2017 (US$2 billion across 63 deals) crossed the US$2 billion for the second consecutive month in 2017. However, there was a decline of 8% and 24% in value terms compared to April 2016 and March 2017 respectively. In terms of volume, it increased by 29% and 5% over April 2016 and March 2017 respectively. There were seven deals greater than US$100 million, accounting for almost 59% of aggregate deal value (US$906 million) in April 2017 compared to three (US$ 885 million) in April 2016 and four (US$173 million) in the previous month. Despite a significant number of large deals (over US$100 million) the aggregate deal value declined in April 2017 on account of a fewer number of mid-sized deals in the range of US$20 million-US$50 million. In the mid-size segment, there were two deals worth US$61 million in April 2017 compared to 11 deals worth US$ 387 million in April 2016 and eight deals worth US$270 million in the previous month.
Commenting on the PE landscape, Mayank Rastogi, Partner and Leader for PE, EY said, “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.”
Buyouts accounted for 45% of the total deal value with US$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% mark of the numbers that were recoded for all of last year. The top buyout deals include Capital Square Partners’ US$275 million buyout of Aegis Limited from Essar, Macquarie’s US$250 million buyout of Hindustan Powerprojects, True Norths and co-investor’s US$200 million investment in Religare Health Insurance Company for a 80% stake, Kedaara Capital and Ontario Teachers’ Pension Plan investment of US$100 million in the microfinance company Spandana Sphoorty Financial Limited for a majority stake. On the back of strong public markets, PIPE deals recorded just US$81 million across three deals in April 2017, after recording a high of US$1.5 billion in the previous month. Debt deals also saw a sharp decline with US$11 million across four deals compared to US$ 297 million across eight deals in April 2016 and US$259 million across six deals in the previous month.
From a sector perspective, Financial Services (US$316 million across nine deals) led the activity, followed by Technology with (US$306 million across 15 deals). Real Estate recorded one deal with CPPIB investing US$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 US$250 million in OYO rooms.
Canadian pension funds further added to their India investments with two large deals (over US$100 million). They accounted for almost a third of all investments in 1Q17.
April 2017 recorded one billion dollar in exits, a 270% increase over April 2016 and 158% over March 2017 in terms of value and, 117% and 41% in terms of volume over April 2016 and March 2017 respectively. With 31 deals, April 2017 recorded the highest monthly exits tally in the past 5 years. Exits in 2017 now total US$3 billion, which is 46% of the aggregate value recorded in 2016.
As in the previous month, open market exits with US$653 million across 15 deals emerged as the preferred mode of exits, accounting for 65% of exits by value and 58% by volume. Cement and Building products emerged as the top sector with US$307 million across three deals followed by Financial Services with US$196 million across 6 deals. There was one PE-backed IPO in the month (Shankara Buildcon, where Reliance Alternative Investments sold its 25% stake for US$39 million).
April 2017 recorded US$377 million in fund raise, at par with April 2016, but a 3.7 fold increase from the low witnessed in the previous month. Credit fund is emerging as a new theme with Edelweiss raising US$350 million to close its US$555 million fund on the back of US$300 million raised by KKR in 1Q17, while Ascend Capital and Baring PE making fund raise plans for a credit fund of US$400 million and US$112 million respectively.
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