PE sees record inflows of $24.4 bn in 2017
MUMBAI: The private equity sector has seen robust growth in 2017 with average deal size doubling in the year although deal volume declined.
The overall deal volume fell by 22% to 570 deals in 2017 from 726 in the previous year, even as the average deal size surged to $42.8 million from $21.2 million.
India received a record $24.4 billion in private equity (PE) investments in 2017, 26% more than the previous highest $19.3 billion recorded in 2015, according to data compiled by Venture Intelligence, a researcher focused on private company financials, transactions and valuations. The 2017 deal value marked a 59% increase over the $15.4 billion India received in the previous year.
“Investors’ confidence in India’s growth trajectory remained evident and could be owed to a number of macroeconomic triggers including the Insolvency and Bankruptcy Code (IBC), dismantling of the Foreign Investment Promotion Board (FIPB) and the introduction of the goods and services tax (GST),” said Sanjeev Krishan, partner, PE and deals, PWC India.
Among top sectors, informa tion technology (IT) and It-enabled services (ITES) retained its dominant position, accounting for 46% of the investment value this year. Investments in IT and ITES grew by 140% to $11.4 billion in 2017. IT and ITES was followed by deals in the financial services sector, which increased 56% to $4.4 billion in 2017. The value of healthcare deals increased 10% to $1.3 billion.
Top deals in 2017 included an investment of $2.5 billion in Flipkart by Japan’s Softbank Group Corp., followed by another investment of $1.4 billion in Flipkart by Tencent Holdings Ltd, ebay Inc. and Microsoft Corp.
The other top deals in 2017 included a $1.4 billion investment by Softbank in One97 Communications Ltd, which runs Paytm; a $1.1 billion investment in India’s largest cab-hailing service Ola (ANI Technologies Pvt. Ltd) by Tencent and Softbank; and Bain Capital’s $1.1 billion investment in Axis Bank Ltd.
The top five deals together accounted for $7.5 billion, or 31% of total PE investments in 2017.
“This year has witnessed a number of big-ticket deals with Japanese and Chinese investors at the front line of the activity; this is expected to continue in 2018,” Krishan added.
Private investment in public equity (PIPE) deals and pre-ipo (initial public offering) transactions witnessed a spurt in activity in 2017.
PIPE deals, which accounted for 12% of the overall investment activity, was dominated by the financial services sector.
Top PIPE deals included Bain Capital’s $1.1 billion investment in Axis Bank Ltd, a $338 million investment in Kotak Mahindra Bank Ltd by Caisse de Depot Quebec (CDPQ) and Canadian Pension Plan Investment Board’s (CPPIB), and a $260-million investment in RBL Bank Ltd by CDC Group and Renuka Ramnath-led Multiples Alternate Asset Management Pvt. Ltd.
Fund-raising activity by PE funds slowed this year, the data showed. A total of $4.3 billion was raised in 2017, a decline of 21% from the $5.4 billion raised in the previous year.