PE/VC investments fall by 60 per cent to $1.4 bn

Absence of any mega deals -- with value greater than $300 million -- led to a sharp decline in private equity and venture capital (PE/VC) investments by 60 per cent to $1.4 billion during February, a report said on Wednesday.

According to EY's PE monthly deal tracker, February recorded investments worth $1.4 billion across 63 deals.

"Exits also recorded a significant decline of over 70 per cent in terms of value and over 50 per cent in terms of volume, primarily on account of fewer open market exits," said the PE monthly deal tracker report.

The report pointed out that unlike the trend seen over the past few months, there were no mega deals in February.

"The largest investment in February 2018 was worth $170 million, IIFL's purchase of 30 per cent stake in NSDL e-governance Infrastructure from IDBI Bank," said the report.

This investment was followed by ASK Group's $155 million investment in Shriram properties to set up a fund for investing into affordable, mid-housing and distressed assets, it added.

"Deal activity clearly suggests that PE/VC investors have taken a breather in February 2018 after a hectic January. Global volatility spiked in early February, equity indices globally corrected, and India was no exception," said Vivek Soni, Partner and Leader for Private Equity Advisory, EY.

"Given the recent announcements by the US on trade tariffs, global volatility could continue well into March. While PE/VC investing is about the long-term, volatility does impact investor sentiment and consequently the timing of investments and exits," he added.

Soni said data suggested that the underlying trend of a steady increase in value of PE/VC investments, exits and average deal size remained intact.

The deal tracker report revealed that in terms of stages of investments, expansion/growth investments recorded the highest value of investments in February, with 22 deals worth $720 million.

In terms of volume, start-up/early stage investing recorded the highest number of deals (30 deals worth $295 million).

There were three buyouts worth $86 million in February, said the report.

Sector-wise, financial services led the activity in February 2018 -- with $447 million invested across 13 deals -- followed by technology, with $296 million invested across 14 deals.

The month under review recorded 12 exits worth $234 million, a decrease in both value and volume compared to the previous month as well as February 2017, said the EY deal tracker.

"The largest exit in February 2018 saw Apollo Global selling its investment in Logix Group's projects in Noida back to the promoters for about $74 million, marking its first exit from a real estate project since it started investing in the sector on its own in 2016," it said.

In addition, February 2018 witnessed three fund raises worth $153 million.

Last month, PE/VC investments had doubled to $3.5 billion across 51 deals -- an increase of 98 per cent over last year -- 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.

--IANS

ppg/mr