Private equity firms invested $1,120 million (around Rs 7,600 crore) in domestic firms last month, registering a marginal decline over the same period last year owing to smaller average investment sizes.
According to assurance, tax and advisory firm Grant Thornton, there were 97 transactions worth $1,120 million in January 2016, while 71 such deals worth $1,148 million were made in January last year.
"Despite strong PE investment momentum with volumes increasing 37 per cent (year-on-year), value continued to remain stable due to smaller average investment sizes as compared to January 2015," the Grant Thornton report said.
Sector-wise, PE or VC investments in information technology and ITeS displayed significant traction and contributed 80 per cent of the total deal volumes. Within this sector, the e-commerce space continued to dominate with more than 57 investments last month.
The top deals of the month include online auto classifieds platform CarTrade raising $145 million in funding, led by Temasek and March Capital, and global investment bank Goldman Sachs' $66 million investment in Hotel investment and development firm SAMHI Hotels.
"With the increase in PE activity and in lieu of lack of acquisition financing in India, Domestic M&A is expected to rise on the back of pickup in alternate buy out financing by PEs," Grant Thornton India LLP Partner Prashant Mehra said.
New research from Grant Thornton's International Business Report (IBR) reveals that going into 2016, India ranked number one in terms of business optimism about the economic outlook.
"Hopefully, this optimism along with certain key measures which the government is taking will help accelerate growth in deal activity in 2016," Mehra added.