Private equity and venture capital investments in February, registered a sharp 60 per cent month-on-month decline to USD 1.4 billion across 63 deals, due to the absence of any mega deals, says a report. No major deals above the value of USD 300 million happened last month, causing the decline from January 2018, which registered deals worth USD 3.5 billion, according to a report released by consultancy firm EY. Exits also recorded a significant drop of over 70 per cent, in terms of value and over 50 per cent in terms of volume, primarily on account of fewer open-market exits. In terms of volume, however, investments grew by 17 per cent, compared to January.
According to Vivek Soni, partner and leader for private equity advisory, EY, deal activity clearly suggests that PE/VC investors have taken a breather in February, after a hectic January. “Global volatility spiked in early February, equity indices corrected, and India was no exception,” he said. Given the recent announcements by the US on trade tariffs, Soni said global volatility could continue well into March. “While PE/VC investing is about the long-term, volatility does impact investor sentiment and consequently, the timing of investments and exits,” he indicated.
The consultancy, however, projected a positive view for the India investment scenario. “The data suggests that the underlying trend of a steady increase in value of PE/VC investments, exits and average deal size, remains intact,” it said. January was a good month for investments, witnessing a large investment worth USD 1.7 billion in mortgage major HDFC by a group of investors including GIC, KKR and others.
On a year-on-year basis, investments grew by 256 per cent to USD 393 million in February, while the number of deals also more than doubled, the report said. February witnessed four deals of over USD 100 million, aggregating USD 580 million, compared with none last year. The largest investment was USD 170 million by IIFL to purchase 30 per cent stake in NSDL e-Governance Infrastructure (NEGIL) from IDBI Bank. This was followed by ASK Group’s USD 155-million investment in Shriram Properties, to setup a fund for investing into affordable, mid-housing and distressed assets.
In terms of stages of investments, expansion or growth capital got the highest investments in February, with 22 deals worth USD 720 million. In terms of volume, startup or early stage investing recorded the highest number of deals at 30, worth USD 295 million. There were three buyouts worth USD 86 million in February. Sectorally, financial services led the activity in February, with USD 447 million invested across 13 deals, followed by technology with USD 296 million invested across 14 deals, the report noted.
February also witnessed 12 exits worth USD 234 million, lower in both volume and value, compared to January. The largest exit in February was Apollo Global selling its investment in Logix Group’s projects in Noida back to the promoters, for about USD 74 million, marking its first exit from a real estate project since it started investing in the sector on its own in 2016, according to the report.