 "PE funds set to make three-times return")
India saw private equity (PE) deals slowing in the three months ending September, as deal sizes shrank and investors grew more cautious while investing in start-ups, says a report by VCCEdge.
PE investments fell 63 per cent to $2.3 billion (Rs 15,350 crore) in the third quarter of 2016, as compared to $6.3 billion (Rs 42,000 crore) a year before. The number of deals declined by 45 per cent to 258, from 469 for the same period last year.
According to data collated by VCCEdge, median deal values dropped 70 per cent over the past five years. Apart from a few large transactions that skewed the average deal size upwards, about half the deals remained under $1 million (Rs 6.7 crore) each.
“The trends in mean and median deal values clearly suggest that investors have started writing smaller cheques. Hence, not only was raising capital difficult this year; the amount raised was also small,” said the report.
Angel and seed investments led the PE activity, with 152 deals amounting to $49 million, against 245 deals worth $121 million in the corresponding quarter last year.
For the nine months ending September, angels have pumped in $179 mn from 541 deals, against 590 deals amounting to $273 mn for the corresponding period a year before, the report said.
PE funds' investment accounted for 29 deals worth $1.2 bn in the reporting quarter, down from $3.45 bn in 51 deals in the same quarter of 2015. Venture capital investment deal value fell from $1.9 bn in 151 deals last year to $803 mn from 69 deals in the September quarter.
Overall, 258 deals in the September quarter as compared to 469 for the same period last year, and 11 per cent lower than the previous quarter.
India saw 945 deals worth $8.8 bn in the nine months ending last month, against 1,245 deals worth $16.7 bn in the corresponding time period last year.
Meanwhile, merger and acquisition (M&A) deals spiked in value, rising 242 per cent over last year to $25 bn for the three months ended September. There were 232 M&A deals to the tune of $24.7 bn, from $7.2 bn raised in 254 deals in the corresponding quarter last year, the report said.
Deal value picked up for domestic M&As from $1.5 bn to a little more than $20 bn; outbound deal value slipped 58 per cent.
The top three domestic M&A deals in the quarter were HDFC Standard Life’s purchase of Max Life Insurance for $9.7 bn in August, the Reliance Communications–Aircel merger deal of $7.3 bn in September and Nirma buying into the cement business of Lafarge India for $1.4 bn in July.
Delhi-National Capital Region topped in value and number of deals during the quarter, with $774 mn across 67 deals, with 43 of the latter in information technology (and, 15 in consumer discretionary). Followed by Mumbai and Bengaluru with 37 deals amounting to $507 mn and 47 deals amounting to $221 mn, respectively.
Initial Public Offers of equity, the report found, increased by 182 per cent to $2.9 bn in value from January to September. Qualified Institutional Placements lost flavour, declining 91 per cent from $2.6 bn to $228 mn this year.
PE investments fell 63 per cent to $2.3 billion (Rs 15,350 crore) in the third quarter of 2016, as compared to $6.3 billion (Rs 42,000 crore) a year before. The number of deals declined by 45 per cent to 258, from 469 for the same period last year.
According to data collated by VCCEdge, median deal values dropped 70 per cent over the past five years. Apart from a few large transactions that skewed the average deal size upwards, about half the deals remained under $1 million (Rs 6.7 crore) each.
“The trends in mean and median deal values clearly suggest that investors have started writing smaller cheques. Hence, not only was raising capital difficult this year; the amount raised was also small,” said the report.
Angel and seed investments led the PE activity, with 152 deals amounting to $49 million, against 245 deals worth $121 million in the corresponding quarter last year.
For the nine months ending September, angels have pumped in $179 mn from 541 deals, against 590 deals amounting to $273 mn for the corresponding period a year before, the report said.
PE funds' investment accounted for 29 deals worth $1.2 bn in the reporting quarter, down from $3.45 bn in 51 deals in the same quarter of 2015. Venture capital investment deal value fell from $1.9 bn in 151 deals last year to $803 mn from 69 deals in the September quarter.
Overall, 258 deals in the September quarter as compared to 469 for the same period last year, and 11 per cent lower than the previous quarter.
India saw 945 deals worth $8.8 bn in the nine months ending last month, against 1,245 deals worth $16.7 bn in the corresponding time period last year.
Meanwhile, merger and acquisition (M&A) deals spiked in value, rising 242 per cent over last year to $25 bn for the three months ended September. There were 232 M&A deals to the tune of $24.7 bn, from $7.2 bn raised in 254 deals in the corresponding quarter last year, the report said.
Deal value picked up for domestic M&As from $1.5 bn to a little more than $20 bn; outbound deal value slipped 58 per cent.
The top three domestic M&A deals in the quarter were HDFC Standard Life’s purchase of Max Life Insurance for $9.7 bn in August, the Reliance Communications–Aircel merger deal of $7.3 bn in September and Nirma buying into the cement business of Lafarge India for $1.4 bn in July.
Delhi-National Capital Region topped in value and number of deals during the quarter, with $774 mn across 67 deals, with 43 of the latter in information technology (and, 15 in consumer discretionary). Followed by Mumbai and Bengaluru with 37 deals amounting to $507 mn and 47 deals amounting to $221 mn, respectively.
Initial Public Offers of equity, the report found, increased by 182 per cent to $2.9 bn in value from January to September. Qualified Institutional Placements lost flavour, declining 91 per cent from $2.6 bn to $228 mn this year.
