At $3.1 bn, PE and VC investments hit 10-year high in May NUMBER CRUNCHING

Private equity and venture capital (PE and VC) investments have recorded the highest monthly numbers in last 10 years at $3.1 billion in May. For the third consecutive month in a year, the investment flow crossed the $2-billion mark.

Financial services topped the table on account of the $1.4-billion investment by SoftBank in Paytm. This deal accounted for 46 per cent of the aggregate deal value for the month.

According to EY data, the month recorded a 264 per cent increase in terms of value and 23 per cent in terms of volume over May 2016. PE and VC firms invested $3,064 million across 55 deals in May this year as against $843 million across 45 deals in May 2016.

There were five deals of more than $100 million aggregating to $2.3 billion, accounting for 75 per cent of the aggregate deal value in May 2017. Another important deal during the month was the $500million investment by Canada Pension Plan Investment Board in IndoSpace (a real estate platform for industrial and logistics parks) for a majority stake, thus taking the investments by Canadian pension funds in 2017 close to $2 billion.

Mayank Rastogi, partner and leader for PE at EY, said, “Indian PE and VC market has significantly matured over time. Five to seven years ago, the classic growth capital was the only meaningful capital pool available, having limitations of investment horizon and return expectations, etc. and could not have suited some specific situations. There are a variety of capital pools now available ranging from angel to VC to buyout funds, family offices, pensions and sovereigns, corporate funds, debt funds, sector-focused funds, etc, providing solutions that address specific needs — this is one of the key drivers for continuing buoyancy in the PE and VC investments in India.” Financial services ($1.6 billion across 11 deals) emerged as the most-active sector on account of the Paytm-SoftBank deal, the largest deal in the financial services sector till date. Real estate sector followed ($709 million across four deals) and e-commerce ($211 million across six deals) in terms of activity.

May recorded $1 billion in exits and was the second consecutive month with more than $1 billion in exits.

The strong buyout trend established over the past two years has continued into 2017, with $2 billion invested across 18 deals till date.

January to May, there was a significant increase of over 60 per cent compared to 2016 and over 100 per cent compared to 2015, both in terms of value and volume. Debt deals recorded the biggest monthly volume since 2014, with $377 million recorded across 12 deals. Open market deals emerged as the preferred mode of exit, accounting for 36 per cent of exits by value and 50 per cent by volume, similar to the trend seen in the previous month. Till date, open-market exits have accounted for 49 per cent of the total value of exits in 2017 compared to 25 per cent for the whole of 2016. There was one PE-backed IPO in May 2017 (S Chand, a publishing company), which saw Everstone exiting a 13.9 per cent stake for $48 million.

Till May 2017, PE-backed IPO tally stands at four compared to eight during the same period in 2016.

Financial services emerged as the leading sector, with exits worth $466 million across six deals followed by the health care sector, with exits worth $260 million across three deals.