PE deals up 20% in Q4 on hike in NBFC, healthcare & power flows

Rise in flow to NBFC, health care & power segments; largest investment in Q1 was IFC's $260-mn commitment to Bandhan

Private equity (PE) deals were up by a fifth in value terms during the fourth and final quarter (Q4, January-March) of 2014-15, at $2,646 million, compared with $2,212 mn a year before.

The number was 124 deals as compared with 132 in the same quarter a year before. All these and subsequent figures here exclude PE investments in real estate. The data come from Venture Intelligence, a research service focused on private companies’ financials, transactions and their valuations.

The invested amount was 36 per cent lower than in the immediate previous quarter (October-December). On the back of big deals in e-commerce, it had seen $4,120 mn invested across 112 transactions.

Non-bank finance, health care and power got a large chunk of the investments.

There were six investments worth $100 mn or more during the first quarter of 2014-15, compared with four such transactions in the same period a year ago and eight during the immediate previous quarter.

The largest investment during Q1 of FY15 was International Finance Corporation’s $260-mn commitment to micro financier-turned-bank licence holder Bandhan Financial Services. Another micro finance entity, Ujjivan Financial Services, attracted a $100 mn (Rs 600 crore) investment from a clutch of investors, including CDC Group, IFC and CX Partners.

Two large hospital operators – Manipal Health Enterprises and Medanta Medicity – attracted $100 mn plus rounds. While Manipal attracted Rs 900 crore ($150 million) from TPG Capital, Medanta attracted Rs 700 crore (about $114 mn) from Temasek (via a secondary purchase from Punj Lloyd).

The largest e-commerce deal reported in the first quarter of FY15 was the $100-mn fourth round raised by ShopClues.com, led by Tiger Global (also a key investor in rival Flipkart).

The power sector witnessed a return of interest with IDFC Alternatives committing Rs 500 crore ($81 mn) to a Special Purpose Vehicle of Diligent Power, implementing a 1,200-Mw thermal power project in Chhattisgarh and Actis announcing an SPV of its own Ostro Energy, to focus on renewable power projects. Transactions like Carlyle’s buyout of financial services firm Destimoney (from erstwhile majority owner New Silk Route), as well as Ujjivan (in which half the money went to exiting investors, including Sequoia Capital India), marked a return of significant-sized secondary transactions between PE entities.

Information technology and IT-enabled services companies accounted for 32 per cent of the value pie (attracting $836 mn across 71 deals) during the April-June quarter. Banking, financial services and insurance (BFSI) companies followed closely at 31 per cent, (attracting $816 mn across 12 deals). They were followed by health care & life sciences companies ($392 mn across nine transactions) and energy companies ($207 million across six transactions).

The venture capital (VC) segment (defined as investments of up to $20 mn in companies active for less than 10 years) accounted for 68 of the PE transactions or 55 per cent of the volume pie during that first quarter. Late-stage companies (including mature ones like Bandhan, Manipal Health, Medanta and Ujjivan) attracted 27 investments and accounted for 45 per cent of the pie in terms of value during the period. Listed company investments were eight per cent of the pie in value terms (and six per cent in volume terms).

VC investments of Q1 were dominated by follow-on rounds in companies like online video content firm Culture Machine ($18-mn round led by Tiger Global), food ordering app TinyOwl ($16.25 mn led by Matrix Partners India) and QSR chain Faasos ($16-mn round led by Lightbox). Listed companies that attracted PE investments were topped by BFSI companies like Magma Fincorp (Rs 500 crore or about $80 mn from India Value Fund, Leapfrog and KKR) and M&M Financial ($42 mn from Temasek).