Private Equity

Number of US$ 100 million private equity deals grew to 44 in 2015

PE investments touched a record high of $16.8b in 661 deals

Private equity (PE) deal size seems to be growing bigger with the number of $100 million-plus investment deals going up in 2015. There were about 44 such deals as against 19 in 2014 as PE players stepped up investments in domestic companies. The surge in investment was led by continued mega investments in consumer targeting internet and mobile services companies that accounted for almost $5.3 billion or 31.5 per cent of the investment pie during the year.

Private equity investments during the year have touched a record high of $16.8 billion in 2015 (in 661 deals). This is 16 per cent higher than the previous high of $14.5 billion (529 deals) recorded in 2007 and a whopping 50 per cent higher than the $11.2 billion (530 deals) in the previous year, according to early data from Venture Intelligence.

Home grown e-commerce giants Flipkart and Snapdeal garnered a total of $1.45 billion between them, followed by taxi aggregator Ola Cabs that gathered $900 million. Flipkart raised $700 million at a reported $15.2 billion valuation in a round that saw participation from existing investors Tiger Global and Steadview Capital and taking the total funding raised by the company to $3.2 billion.

Snapdeal raised $500 million in August in a round led by Chinese e-commerce firm Alibaba Group, Foxconn Technology Group and existing investor Softbank Group. “Large global funds are doing bigger deals in IT and e-commerce and financial services sector and that is pushing up the average deal size. Besides, there is a significant number of buyout and majority stake sale is taking place in traditional business front which is quite large in size in value terms,” says Raja Lahiri, a partner at consultancy firm Grant Thornton.

In value terms, the top PE investments in 2015 also include large buyout transactions in sectors such as broadband, cash management companies and BPO services. In July, global private equity firm TA Associates combined with India Value Fund to invest $500 million to acquire 95 per cent stake in high-speed broadband services provider Atria Convergence Technologies (ACT). In May, Baring Asia acquired 100 per cent stake in cash management services firm CMS Info Systems for $440 million, providing an exit to existing PE investor Blackstone. In another deal, Blackstone bought Intelenet BPO from Serco Plc for $383 million – re-entering the same business that it (along with the management team) had sold to the UK firm in 2011 for more than $630 million.

IT & ITES companies managed to attract 45 per cent of the total investment pie showing strong investor preference to the growth sector. The sector witnessed 386 deals with an investment of almost $7.5 billion investment. BFSI (Banking, Financial Services and Insurance) companies came in next attracting 15 per cent of the pie. Led by $200 million plus transactions in companies like Shriram City Union Finance, ICICI Prudential Life Insurance, India Infoline and L&T Finance, BFSI companies attracted over $2.5 billion (across 42 transactions) in 2015. Healthcare & Life Sciences companies came in third attracting $1.6 billion (across 50 deals).

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