Overall deal activity (M&A and PE) witnessed a marginal 9 per cent increase in deal value in January-November ’17; PE firms invested $19,421 million in India Inc over $11,455 million in 2016.

 

Private equity (PE) firms and venture capitalists (VC) have reasons to cheer. While the overall deal activity (mergers & acquisitions and PE) between January and November 2017 witnessed a marginal increase of 9 per cent in deal value, PE firms invested $19,421 million in India Inc, a whopping 70 per cent jump from the corresponding period last calendar year, as per data available with Grant Thornton.

In November alone, PE investors pumped in $3,019 million compared to a paltry sum of $903 million in November 2016.

“Though PE deal volumes remained stable, deal values surged by over 3 times as compared to transactions activity during the same period last year,” said  Prashant Mehra, Partner at Grant Thornton.

An investment of $1.8 bn by Bain Capital and LIC in Axis Bank alone contributed to about 60 per cent of the total value of private equity deals in November 2017. “In terms of deal volumes, start-ups continue to capture the interest of the PEs contributing to about 80 per cent of the PE deal volume,” said Mehra. In 2015, that is considered as the boom period of investments, total amount that PE/VC infused in India Inc stood at $14,897 million.

But, it’s not about investments alone. This year has proved to be a bumper one in terms of exits – several investors both large and small have been able to reap bountiful harvests from the investments they have made in India Inc in the past few years. This was primarily possible due to the uptick in the stock market this year with primary and capital markets performing remarkably well.

According to a separate set of data available with Venture Intelligence, fund managers recorded the highest number of exits this calendar year that stood at 213 worth $9,978 million. Between January and October 2016, the total number of PE/VC exits stood at 198 with the total value amounting to $7,373 million.

“IPOs are traditionally the best source of exits for private equity investors. A strong revival in the primary market, coupled with a buoyant secondary market, has catalysed a slew of healthy exits through the public market route this year,” says Arun Natarajan, founder of Venture Intelligence.

During the said months in 2015, as many as 240 private equity/venture capital exits took place worth $9,098 million.

“With exits going up, new investments also get a boost,” says Rituraj Sinha, Chief Operating Officer at security services company SIS that went public in August this year.

Going forward, the joy ride for investors is expected to continue as the pipeline for reforms in the run up to elections in the various states and the Government’s persistent effort to attract foreign capital in core sectors is expected to keep the deal activity high in the coming months.

Start-ups, banking and insurance, e-commerce, manufacturing, pharma, healthcare and biotech will be the key sectors that are expected to see action.