PE investments decline 47% in Q4

Private equity (PE) investments in the March quarter slumped by around 47 per cent to $1,886 million, from $3,614 million in the same quarter last year, according to a study. The number of deals also dropped by around 15 per cent to 90, from 107.

According to the study by Venture Intelligence, a research service focused on PE and merger and acquisition (M&A) transaction activity in India, it was the third consecutive quarter that saw a deceleration in PE investments. The immediate previous quarter had witnessed 120 transactions worth $1,470 million.

The January-March period saw six investments worth over $100 million each (and none above $200 million), compared to nine such transactions, including five worth over $200 million each, in the same period last year.

Three of the six investments were in the hospitals & clinics sector: $110 million into CARE Hospitals by Advent International and $100 million each into DM Healthcare and Vasan Healthcare by Olympus Capital and the Singapore government-owned GIC, respectively. Another Singapore government-owned PE investor, Temasek, invested $137 million in publicly listed fast moving consumer goods company Godrej Consumer Products.

The healthcare & life sciences industry attracted $581 million (31 per cent of the value pie) across 14 investments (16 per cent of the investment volume). It was followed by the information technology (IT) & IT-enabled services sector ($308 million across 35 investments) and the banking, financial services and insurance sector ($280 million across 11 investments).

“The trend of larger PE firms buying out the stakes of earlier PE/VC (venture capital) investors in Indian companies gathered momentum during the quarter,” according to the research firm.

For instance, the quarter saw the GIC-Vasan deal (which saw a part exit for Sequoia Capital India); the $104-million investment by General Atlantic in Fourcee Infrastructure (complete exit for Mayfield) and the $50-million investment by Warburg Pincus (part exit for Motilal Oswal PE).

Even new VC investors like the Patni family-sponsored Nirvana Ventures, at the time of its investment in mobile gaming firm

Games2win, chose to provide a similar exit via secondary sale to early investors (Nexus Ventures and ICICI Venture).

PE and real estate firms made 12 investments (worth $477 million across 10 deals with disclosed values). The pace of investments during the quarter was less than half that during the same period last year, which witnessed 28 investments (worth $1,523 million across 26 deals with disclosed values). It was also lower compared to the immediate previous quarter, which witnessed 18 deals (with $641 million being invested across 13 deals). In fact, investment volumes in the sector decelerated for the fourth consecutive quarter.