PE investments in India in Jan-Mar quarter drop by 56%

Private equity firms made investment of $929 million across 66 deals in the first quarter of this year, down by 56% over the same period a year ago, says a PwC report.

According to the report, the quarterly PE investments dropped both in terms of quarter-on-quarter and year-on-year basis.

"The declining deal volumes indicate that the confidence of investors is yet to return following the regulatory and tax concerns caused by the government," PwC Leader, Private Equity Sanjeev Krishan said.

Krishan further said that "there were some large deals in the pipeline during Q1'13, which took time to consummate, adversely impacting the deal values for Q1FY'13. The outlook for the rest of the year looks better than the Q1'13 numbers for sure."

As per the report -- a quarterly study of PE investment activity based on data provided by Venture Intelligence -- the quarterly PE investments dropped by 18% in terms of value in comparison to fourth quarter of 2012 and in terms of first quarter of 2012, there has been a significant decline of 56% in terms of value.

A sector-wise analysis shows that the IT and ITeS sector emerged as the leader in terms of volume of deals accounting to 105 million $in Q1 2013 from 26 deals. However, the sector witnessed a decrease of 40% in value as compared to the preceding quarter.

"Traditionally, the IT and ITeS sector has seen the highest value and volume of investments. However, we have seen a marked drop in the investments this quarter, which can be attributed to the uncertain macro-economic and political environment," PwC Leader Technology Sanjay Dhawan said.

Other key sectors such as food and beverages, manufacturing, textiles and garments, education, healthcare and life sciences have reported considerable decline in the value of investments in this quarter as compared to Q4 FY'12, the report added.

The Banking, Financial Services and Insurance (BFSI) sector led the quarter in terms of value of deals with investments worth $248 million from 8 deals.