PE investments fall to 33-month low at $2.1 billion in Q1 2017

Only four investments were valued at and above $100 million in Q1, as against 7 deals a year ago

Private equity investments in the first quarter of this year fell to nearly 3-year low of $2.1 billion in the absence of big ticket deals, says a report.

According to the assurance, tax and advisory firm, there was a decline both in terms of value as well as volume of deals and PE investment values dropped to the lowest level in the last 11 quarters.

There were 192 PE deals worth $2.1 billion in the January-March quarter, as against 284 such transactions worth $3.02 billion in the year ago period.

"Private investment activity started on a tepid note in Q1 2017 with private equity deal-making remaining weak as venture capital firms turned cautious about backing start-ups in the first three months, recording over $2.1 billion which is 30 per cent fall compared to Q1 2016," Grant Thornton India LLP Partner Prashant Mehra said.

Only four investments were valued at and above $100 million during the quarter, as against 7 deals a year ago.

Mehra further added that in an environment with reducing investments from larger VC and PE players, we witnessed an increasing number of smaller angel and seed-stage investors backing start-ups, as compared to levels seen in the previous quarter. In contrast, companies looking at larger investments may struggle to find investors in the coming quarters.

Warburg Pincus picking up 14 per cent stake in PVR for $120 million was termed as the deal of the quarter.

Sector wise, the PE/VC activity was led by the e-commerce sector, contributing 27 per cent of investment values with four companies raising over $50 million each.

Start-ups saw 61 per cent of investment volumes with discovery platform, enterprise application and infrastructure segment attracting over 30 per cent of investment.

Banking and financial services garnered big ticket investments primarily in the core banking segment with transactions worth $213 million across two deals in the quarter, the report said.