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The Fourth Wheel 2018

In association with IVCA, Grant Thornton presents the sixth edition of The Fourth Wheel which captures recent developments and trends in the private equity (PE) deal landscape. The data presented in the study is based on Grant Thornton’s Dealtracker along with views from leading PE/VC fund houses. The report also tracks the deal sizes and provides an in-depth analysis on the deals and investments across sectors.’

Over the years, PEs have played a transformational role in the Indian corporate landscape - from being mere financial investors, to strategic advisors, minority stakeholders to taking greater control – they have done it all. This gradual shift in PE mindset resulted in several new themes in the PE dealscape: PE-backed buyouts, consolidation among PE-backed entities, sectoral platform creation by large PE houses, PE-backed cross-border/domestic acquisitions, etc. They have created significant value across all stages of a business life cycle.

Key highlights of the publication:

  • 2017 turned out to be a milestone year for PE investments clocking USD 21 bn, the highest yearly value, across 735 transactions.
  • Buoyant on big-ticket investments, the average deal size in 2017 doubled to USD 38 mn from USD 19 mn in 2016.
  • 2017 witnessed mega investments with four deals over USD 1 bn each compared to only two such deals in 2016. However, volumes dropped across funding stages in 2017 with early stage funding going slow and cautious in terms of deal activity and value.
  • E-commerce, financial services, and real estate, dominated PE investments capturing 62 per cent of the total PE investment values, while start-ups dominated the volumes capturing 61 per cent.
  • Key trends underscoring the Indian PE arena are: increase in the size of deals, funds,  and buyouts; technology as an enabler driving investment themes; positive IPO market opening exit avenues; and consolidation within industries, among others.
  • The year saw over 37 mainstream issues aggregating over USD 10.7 bn recording 2.7 times 2016 values, with most issues oversubscribed. Many of the successful IPOs during the year provided a smooth exit for PE funds. The top 4 IPOs, all in the insurance sector, accounted for 55 per cent of overall IPO equity raised.
  • PE funds are optimistic about deal activity in 2018 and are betting big on large deals, and buyouts on the back of strong push from the Government to make India an attractive and favourable business destination.

We hope you will find this report informative and look forward to your feedback.