PE/VC investments double to $3.5 bn in January amid large deals: EY Report

Private equity and venture capital (PE/VC) investments doubled in January to $3.5 billion across 51 deals -- an increase of 98 per cent over last year -- on the back of some large deals, a report said on Tuesday.

According to EY's PE monthly deal tracker, large value deals of over $100 million continued to dominate the activity with the financial services sector leading the way.

"January 2018 recorded almost double the value of investments witnessed last year ($3.5 billion in Jan 2018 vs $1.2 billion in Jan 2017). Compared to December 2017, investments grew by 32 per cent in value terms," said the PE monthly deal tracker report.

The report pointed out that this increase was primarily on account of a large investment worth $1.7 billion by a group of investors including GIC, KKR, CPPIB, Ontario Municipal Employees Retirement System, Carmignac Group and Premji Invest in India's premier mortgage lender HDFC.

The report showed that the first month of 2018 also recorded 26 exits worth $970 million.

"January 2018 recorded $970 million in exits, 10 per cent higher than January 2017 and 42 per cent higher compared to the previous month," said the EY deal tracker.

In terms of volume, there were 26 exits in January 2018 compared to 15 in January last year and 22 in December 2017, it said.

Sectorwise, industrial products (six deals) and food and agriculture (four deals) recorded the highest number of exits.

The report said in terms of value, technology was the top sector with exits worth $332 million.

"After a relatively quiet December 2017, PE activity has picked up again this month, with both investments and exits growing by more than a third compared to the previous month," said Vivek Soni, Partner and Leader for Private Equity Advisory, EY.

"The trend of larger and more complex deals continues with five investments greater than $100 million being announced in the first month of 2018 itself compared to 56 such deals across all of 2017," he added.

Soni pointed out that in terms of sectors, financial services, real estate and healthcare continued to attract most of the investments dollars.

"This month PIPE (private investment in public equity) deals recorded a growth of over 100 per cent compared to the previous month. In 2018, we expect to see the value of PIPE deals growing significantly, as large pension funds and sovereign wealth funds increase their India focus and as deal sizes continue to become larger," said Soni.

In terms of fund raising activity, the report noted that 2018 had a rather tepid start with only $91 million raised in January.

"...nonetheless, fund raise plans announced stood at $7 billion, a sign of strong fund raising activity to follow as the year progresses," it added.