PE investments decline 53% to $2.5 bn in Sep qtr: Report

The decline in PE activity is due to the reduced investment in the new economy companies, says advisory firm Grant Thornton India LLP

Private equity investments declined 53 per cent to touch $2.5 billion during July-September this year, lowest in the last nine quarters, largely owing to absence of big ticket deals, says a report.

According to advisory firm Grant Thornton India LLP, there were 241 PE transactions worth $2,538 million in the September quarter this year, while there were 303 deals worth $5,446 million in the corresponding period last year.

The decline in PE activity is due to the reduced investment in the new economy companies in comparison to the previous year when such investments were in full swing, according to Harish H V, Partner, Grant Thornton India.

In the January-September period, PE investment declined by 32 per cent as compared to the same period last year in terms of value while deals in number terms declined marginally, indicative of reducing average deal size.

The first nine months of the current year witnessed 735 PE deals worth $8,400 million as against 765 such transactions worth $12,408 million in the same period last year.

"With all other factors being lucrative and favourable, PE will perhaps be visualised as an alternative means of financing consolidation for large and select corporates, and this shall result in the long-awaited big ticket transactions in the PE space," Prashant Mehra - Partner at Grant Thornton India said.

Mehra further added that "the sector trend should continue towards core sectors along with considerable activity in the retail/consumer sector in next few quarters".

Hike messaging app's deal to raise $175 million from Tencent Holdings, Foxconn Technology Group, Tiger Global, Bharti Enterprises and Softbank Holdings Pte was the biggest investment pact of the September quarter.

Sectors such as manufacturing, banking and financial services and transportation witnessed big ticket deals in the third quarter this year, valued over $100 million as compared to e-commerce, telecom, startup and real estate sectors that witnessed biggest investment pacts in the same period last year, the report said.