Private Equity

PE deal tally up 30% to US$ 16 billion

Private equity deal tally surged by 30% to $16 billion through 1,000 deals in 2015, largely driven by the startup segment, which contributed 60% of the total investment volume, says a report. In 2014, there were 608 private equity transactions worth $12.37 billion.

According to assurance, tax and advisory firm Grant Thornton, 2015 witnessed PE activity at an all-time peak contributing more than 60% of overall deal volume during the year and 34% of overall deal values.

"With inflation in control and GDP growth being revised to now higher than anticipated, all necessary ingredients seem to be in place for growth in deal activity as well. The recent FDI norms and the much awaited GST will perhaps be a game changer and will further accelerate the deal activity from an inbound investment, domestic M&A and PE perspective," Grant Thornton India Partner Prashant Mehra said.

The substantial increase in volume was largely due to an impressive level of interest among private equity and venture capita investors in India's startups, the report said, adding a huge chunk of the total volume — over 600 investments — involved startups.

The year also witnessed evolved startups like Flipkart, Snapdeal, Olacabs and Paytm raising funds in excess of $500 million at huge valuations. The year also saw various investor classes like angel investors, angel networks, venture capitalists and some of the more established PE funds betting on the startup growth story.

In 2015, IT & ITeS sector witnessed 38% growth year-on-year, thereby reaching the highest record in this segment. This sector alone contributed 45 per cent of total investments with $7 billion in 2015, thereby driving investment growth this year.

Additionally, top 15 deals (with ticket size of above $100 million each) contributed to around 50 per cent of total IT & ITeS transaction values in 2015. Banking and financial sector also witnessed deal growth of over 56 per cent year-on-year in 2015. Investments of more than $100 million each have been made in around seven BFSI players in 2015.

Meanwhile, real estate investments have declined by more than 20 per cent year-on-year, however, it continues to attract substantial investments from PEs being this year's third largest sector by value.

Energy and natural resources and pharma, healthcare and biotech also attracted fair deals valuation during the year, the report added.

This article was published in the Economic Times, to read please click here.