in India in the first half (H1CY17) and second quarter (Q2CY17) witnessed a sharp increase on the back of some large deals
with size in excess of $300 million each.
This was recorded as the highest investments
in a half year and quarter respectively, in the history of the industry.
According to EY data, on a half yearly basis, investments
increased by 41 per cent to $11.2 billion from $8 billion in first half of 2016 despite a marginal decline in deal volume (298 deals
v/s 310 deals
Both, buyout deals
($2.2 billion across 18 deals) and PIPE deals
($1.9 billion across 23 deals) recorded strong growth in first half of 2017 of 76 per cent and 72 per cent respectively, the best half yearly performance for buyout deals
and the second best for PIPE deals
in over 10 years. Buyout deal volumes have been sequentially increasing with a record high of 18 buyouts in H1CY17.
Aggregate investment value was led by minority growth capital deals
with 41 per cent of the aggregate investments
($4.6 billion invested across 78 deals
in H1CY17, a growth of 35% compared to H1CY16). Early stage / VC deals
continued to dominate the deal volumes accounting for 50 per cent of all deals
in H1CY17 similar to last year.
Also, first half of 2017 saw significant activity from Canadian pension funds
which have been involved in some of the larger investments
made during the year. In aggregate, they invested more than $2 billion across six deals
First half recorded 26 deals
of value $100 million and above, aggregating $7.7 billion and accounting for 68 per cent of the investments
during the period.
On a quarterly basis, investments
increased 93 per cent in value ($ 7.1 billion v/s $ 3.7 billion in Q2CY16) with deal volumes remaining similar. The growth was driven by sharp increase of 103 per cent and 133 per cent in buyout and growth deals
respectively. Second quarter of 2017 demonstrated the best quarterly performance recorded in terms of both buyout ($1.9 billion across 11 deals) and growth ($ 3.1 billion across 47 deals) deals
in over a decade.
From a sector perspective, Financial Services, Technology
and Real Estate
were the leading sectors in terms of investments
both in first half of 2017 and second quarter of 2017. Financial services
recorded $3.4 billion across 51 deals
in first half and $2.5 billion across 33 deals
in second quarter of 2017, the highest half yearly and quarterly numbers recorded by any sector in over a decade, mainly due to the large $1.4 billion Softbank's investment in Paytm. Technology
recorded $1.9 billion across 69 deals
in H2CY17 and $1 billion across 39 deals
declined further after recording a muted performance in 2016. At $617 million across 26 deals, investments
declined 42 per cent in value and 51 per cent in volume terms in H1CY17 compared to H2CY16. In terms of value, e-commerce
recorded the lowest half yearly numbers since H2CY13.
Mayank Rastogi, Partner and Leader for PE, EY said, "India is clearly maturing as a PE market with bigger and more complex deals
becoming more common place. Greater numbers of big size deals
and buyouts are both a testament to this. It is clearly visible in the H1CY17 investment numbers. Improving exit performance, blockbuster exits
over the last couple of years, further supported by buoyant capital markets
have also helped PE funds
reaffirm their India thesis. This can have a multitude of positive benefits as the country searches for big investments
to rev up its growth engines. PE-owned companies are globally known to drive greater revenue and margin growth leading to a multiplier effect on their larger eco-systems. There is massive amount of dry powder available globally and most global funds
are keenly looking for investment opportunities in India."
grew 53 per cent by value in H1CY17 ($4.8 billion as opposed to $3.1 billion in the corresponding quarter, last year)and 50% by volume (129 deals
Vs 86 deals
in H1CY16), best half yearly performance since 2009, mainly driven by increase in open market and secondary divestments. Exits
via open market recorded $1.9 billion (60 deals), five times of the value recorded in H1CY16 and highest ever half yearly tally. Exits
via secondary sale (sale to other PE funds) recorded $1.8 billion (26 deals), eight times of the value recorded in H1CY16 and highest ever half yearly tally for secondary sales. IPO markets have been quite active as well with 6 PE backed IPOs
in H1CY17(8 in H1CY16).
Quarterly comparison shows a 2.6 times jump in exits
value ($2.8 billion Vs $1.1 billion in Q2CY16), again driven by open market and secondary exits.
There were 4 PE backed IPOs
June 2017 recorded 34% increase in value of exits
compared to same period last year ($550mn across 12 exits
vs $409mn across 14 exits
in June 2016). However, on a month-on-month basis, there is sharp decline of over 50% in both value and volume terms.
From a sector perspective, financial services
($1.6 billion across 31 exits), technology
($1 billion across 13 exits) and life sciences ($756 million across 23 exits) were the top sectors for exits