PE firms invested $1.28 bn in July-Sep qtr: PwC report

Private equity investments in the third quarter of this year stood at $1.28 billion, registering a drop of 50% over the previous quarter, says a PwC report.

After an impressive second quarter, the PE investments in the July-September quarter dropped by more than 50% in value and 31% in volume as against April-June 2013, according to the PwC MoneyTree India report, a quarterly study of PE investment activity based on Venture Intelligence data.

In April-June period of 2013, PE firms had invested $2.33 billion across 82 deals.

On a year-on-year basis as well, PE investments declined 67% in terms of value and 40% in terms of volume respectively. In Q3 2012, the value of investments were at $3.91 billion from 126 deals.

"Overall, the private capital investment thesis continues to remain challenging for India...," PwC Leader, Private Equity Sanjeev Krishan said.

A sector-wise analysis showed that the IT and ITeS sector has emerged as the leader in terms of value and volume of investments with an investment of $582 million from 25 deals in the third quarter of 2013.

Moreover, within the IT and ITeS sector, the online services sub-segment recorded the highest investment worth $293 million from 10 deals, the highest in terms of volume too.

"The IT and ITeS sector being a less capital-intensive industry typically receives higher volume of investments (not necessarily high value) as against other sectors, especially during early stages of businesses being set up," PwC Leader, Technology Sandeep Ladda said.

This quarter has also witnessed a couple of big deals in the online services and IT services segments.

"With the exponential growth and importance of e-commerce, a few of the leading e-commerce companies have seen success and are now looking to leap into the next phase of growth by expanding their operations and hence attracting investments," he said.

He said "we can expect more such investments in the small and medium sized IT services companies which offer niche services."

The manufacturing sector ranked second in terms of value as it witnessed investments worth $185 million, while the healthcare and life sciences sector investments were worth $157 million across 15 deals, the report said.

By region, Mumbai retained its rank at the top, recording highest level of funding at $429 million, followed by Bangalore with an investment of $323 million.

Meanwhile, private equity investments in NCR, Hyderabad and Chennai, too, have shown a dip in the value of investments this quarter, as against the previous quarter.