Private equity, venture capital flow value falls 49% in Jan, deals up 65%

The strong trend of buyouts established in 2018 has continued into 2019 with 4 buyouts worth $504 mn recorded in Jan 2019 -- 20% higher compared to Jan 2018

Flow of private equity and venture capital investments into India during the month of January stood at $1.8 billion, which was 49 per cent lower compared to January 2018 and 43 per cent lower compared to the previous month. However, the number of deals rose by 65 per cent on a year-on-year (Y-o-Y) basis.
 

According to EY's Private Equity Monthly Deal Tracker, the decline in value was mainly on account of the absence of a large $1-billion-plus deal, whereas both January 2018 and December 2018 had one such large deal each. This has effectively skewed the headline number by a wide margin.
 

January 2019 recorded four large deals ($100-million-plus deals), aggregating $1.1 billion, compared to five large deals worth $2.8 billion in January 2018 and six large deals worth $2.3 billion in December 2018, according to EY data.
 

In comparison to the $1-billion-plus deals in January 2018 and December 2018, the largest deal in January 2019 was SoftBank's $397-million investment in First Cry, an e-commerce platform for kids and baby products. The other large deals in January 2019 included Apax's $230-million investment in Fractal Analytics and AION's buyout of BPO firm Interglobe Technologies for $230 million.

 

Growth investments stood at $940 million in the month under review and were more than twice the value recorded in January 2018. PIPE investments, at $2.8 million, recorded their lowest monthly value since October 2014. In comparison, January 2018 had recorded $1.7 billion in PIPE investments, mainly comprising of the $1.7-billion investment in HDFC Limited by a group of investors, including KKR, GIC and others.
 

The strong trend of buyouts established in 2018 has continued into 2019 with four buyouts worth $504 million recorded in January -- 20 per cent higher compared to January 2018. Start-up investments in January 2019, at $343 million across 56 deals, were higher by 46 per cent in terms of value and over 50 per cent in terms of the number of deals compared to January 2018.

Attracting $607 million across 11 deals, as against $17 million across two deals in January 2018, e-commerce was the top sector, followed by technology, which garnered $438 million across nine deals in January 2019, against $86 million across 11 deals in January 2018. 
 

Exits

Exits in January 2019 stood at $360 million, recording a significant decline compared to $969 million in January 2018, mainly on account of fewer large exits. The largest exit in January 2019 saw TA Associates and Khazanah exit their investments in Fractal Analytics via a secondary sale to Apax for $200 million.

In terms of the number of exits, January 2019 recorded just 13 exits compared to 29 recorded in January 2018. The lower exit deal activity was mainly on account of fewer open market exits (five deals in January 2019 vs 15 in January 2018). Also, there were no PE-backed IPOs in January 2019 compared to two in January 2018.

From a sector-wise perspective, technology came out on top, primarily on account of the $200-million Fractal Analytics deal.  

Period	PE investment		PE exits		PE fundraise
	Value ($ mn)	Volume	Value ($ mn)	Volume	Value ($ mn)	Volume
Jan 19	1825	89	360	13	2469	10
Jan 18	3574	54	969	29	244	7