PE investments in India see action packed Q2: Study

The second quarter of calendar year 2015 has been noted for plenty of action in the PE investment space. The April to June quarter (Q2 ’15) has seen 4.29 billion USD worth of investments across 135 deals, which is 35% higher than Q1 ’15 and 36% higher than the corresponding period of previous year. Q1 ’15 had seen investment worth 3.18 billion USD in 172 deals while Q2 ’14 had witnessed 3.16 billion USD in 129 deals. Together, Q1 and Q2’ 2015 made the first half of the year the best-ever in the history of PE investment in India, totalling at 7.47 billion USD.

These findings are part of the PwC MoneyTree™ India report, a quarterly study of private equity investment activity based on data provided by Venture Intelligence.

In the reporting quarter, the all-time favorite information technology (IT) and IT-enabled services (ITeS) sector made a comeback to the top slot with 1.77 billion USD worth of investments in 85 deals, up 76% from the previous quarter and more than 2.5 times from the same period in the previous year.

Sandeep Ladda, leader - Technology, PwC India said, “This trend is expected to continue with more firms investing in newer technologies. Smart machines are expected to usher in a new era of digital transformation with wearables, advanced robotics, 3D printing, virtual personal assistants and smart advisors evolving rapidly. Customer experience is the key to success in the growth of internet businesses and we expect to see significant product investment from companies in improving the customer experience and consumer engagement."

Sanjeev Krishan, leader, Private Equity, PwC India said, “We expect th`e buoyancy exhibited in H1 2015 to continue in the second half of the year—in the short term, deal activity in e-commerce, healthcare, IT and life sciences is expected to continue; the core and infrastructure sector may see some transactions too. While the Reserve Bank of India has maintained rates for now, it is expected that we would move towards lower rates over a period of time, and this should help. We expect a lot of secondary transactions during H2, as PEs attempt to exit their existing investments and use the opportunity to raise new funds.”

Healthcare and life sciences attracted investments worth 827 million USD—more than double the figure in Q1 ’15 and 46% more than Q2 ’14.

Late-stage investments once again outperformed and received an investment value of 1.56 billion USD followed by public market investments that attracted 938 million USD.

Mumbai made a comeback to the top slot with regard t0 PE investments in this quarter with an investment of 2.02 billion USD from 28 deals.

In the history of private equity in India, the second quarter of 2015 has been a ‘super exit’ quarter as it has seen the largest chunk of exits amounting to 3.63 billion USD in 50 deals. This is more than twice the previous quarter and three times over the same period last year. Q1 2015 saw exits worth 1.53 billion in 50 deals whereas exit value of Q2 2014 was 1.24 billion with 61 deals.

The IT sector has outshined in exits as well seeing 1.93 billion USD in 13 exits while the BFSI sector has seen exits worth 437 million USD in just four deals.

Strategic sales has continued to be the preferred exit route, with 1.55 billion USD worth of exits in 11 deals while public market sales witnessed exits worth 977 million USD.