PE/VC investments, exits at record high of $5.4 bn in Aug 2017: EY

Private equity and venture capital (PE/VC) investments rose in August by 5.4 times over the amount in August 2016, to $5.4 billion (Rs 34,600 crore), the highest ever in a month.

This was mainly on account of two mega deals, SoftBank’s (of Japan’s) $2.5-bn investment in Flipkart and GIC’s (the Singapore government’s sovereign wealth fund’s) $1.4-bn investment in DLF commercial property assets. These were also the largest deals ever in the e-commerce and realty sectors, respectively.

In number of deals, there was 18 per cent growth in August from the 39 of the same month last year, according to a report from consultancy EY.

Even if one excludes the deals mentioned earlier, investments and exits recorded healthy activity in both value and volume terms in the month. At this pace, these investments should breach $20 bn and exits the $10-bn mark, for the first time in the history of the PE/VC segments in India.

Among sectors, e-commerce ($2.5 bn across four deals) reported the highest activity after a long time, on account of the SoftBank deal, followed by real estate ($1.6 bn in six deals) and financial services ($771 million in 10 deals).

There were two fund raisings in August, worth $110 mn, compared to none in August last year. The larger was by Lok Capital of $90 mn, targeted at companies in the early stage. There were announcements of close to $364 mn fund raising plans.

There were 25 exits totalling $1.9 bn, almost four times higher than a year before, the highest value in a month till now. This is the second time when exits have crossed $1 bn in a month this year. Also, the aggregate value of exits in 2017 till date, at $7.1 bn, is the highest value in any year ever, surpassing the record of $6.7 bn in 2016. In terms of volume, at 25 exits, August recorded an increase of 19 per cent from the month a year before. 

Tiger Global selling its partial stake in Flipkart to SoftBank for $800 mn was the largest exit deal for the month.  

There was only one PE-backed Initial Public Offer of equity in August. It saw CX Partners selling its 4.8 per cent stake in Security and Intelligence Services India for $42 mn, through an Offer for Sale.