PE exits have nosedived to US$ 0.3 billion in Q1'14
Investments in the first quarter of CY 2014 have started on a positive note. PE firms have invested US$ 2.38 billion across 99 deals, a growth of 14% in value and 15% in volume over the preceding quarter. In Q4 of CY13, investments were worth US$ 2.08 billion from 86 deals. The findings are part of the PwC MoneyTree India report, a quarterly study of private equity investment activity based on data provided by Venture Intelligence.Even when compared against the same period last year, i.e., Q1'13, the value of deals has doubled despite a 7% decrease in the volume. In Q1'13, the value of investments was US$ 1.17 billion from 107 deals.
With 43 deals worth US$ 908 million in Q1 of CY14, the information technology (IT) and IT-enabled services (ITeS) sector is yet again the leader in terms of value and volume. However, the sector has shown a 7% drop in deal value despite two additional deals in this quarter as compared to Q4'13. Within the IT and ITeS sector, the online services sub-segment received the highest level of investment worth US$ 405 million from 19 deals. The ITeS-BPO services recorded a spurt in investments this quarter with one major deal, thereby ranking second in terms of value among the sub-segments. Investments stood at US$ 265 million from a couple of deals in this reporting quarter.
The energy sector has shown a surge in investments with an increase of almost eight times in value, from US$ 52 million in Q4'13 to US$ 414 million in this quarter with an additional deal. Even when compared to Q1'13, the value of investments has more than doubled with two additional deals.
The engineering and construction sector too has shown an investment spurt this quarter and ranks third in terms of value. The sector witnessed investments worth US$ 348 million from four deals; a seven-fold increase in value as against the preceding quarter with three additional deals in this quarter.
Key sectors such as healthcare and life sciences and BFSI have shown a significant drop in the value of investments in this quarter as against the previous quarter.
The healthcare and life sciences sector had the highest drop in value of investments; from US$ 746 million in the previous quarter to US$ 91 million in Q1'14. Volume too fell by about 44%, from 16 deals in Q4'13 to nine deals in this quarter. Even as compared to Q4'12, the sector witnessed a drop of 40% in both the value and volume of deals.
The BFSI sector showed a drop of 25% in value; from 84 million to US$ 63 million despite two additional deals in this quarter.
In Q1'14, PE investments in the growth stage recorded the highest value, seeing US$ 846 million from 30 deals, which is double the growth in value and a 30% increase in the volume of deals. In Q4'13, investments stood at US$ 420 million from 23 deals. Buyout deals, with an investment of US$ 660 million from five deals, ranked second in terms of value. The value of investments has gone up by 21% with three additional deals in this quarter as compared to Q4'13.
In terms of region, Mumbai emerged as the top region with a nearly three-fold growth in the value of deals despite a drop of 7% in volume. Investments in this region stood at US$ 942 million from 26 deals as against US$ 365 million from 28 deals. The investment value is about 40% of the total PE investments in this quarter. With 26 deals, Mumbai leads in terms of volume too. The National Capital Region (NCR) has slipped to second position, registering funding of US$ 531 million. Bangalore, in this quarter, sees an increase of 74 and 53% in value and volume, respectively, with an investment of US$ 463 million from 23 deals.
Private equity exits
The exit activity in the first quarter of 2014 has nosedived in terms of value and volume as compared to the prior quarter. In Q4'13, PE exits were worth US$ 1.45 billion from 24 deals as compared to US$ 277 million from 15 deals in this quarter. Even when compared to the same period last year, the story is similar.. The exits have shown a decline of 76 and 60% in value and volume, respectively. In Q1'13, there were 37 exits worth US$ 1.13 billion.
The majority of the exits in this quarter came from the IT and ITeS and the agri-business sectors which together contributed over 55% of the total exit value and 40% of the total volume.
The preferred mode of exit in the first quarter of 2014 has been through public market sale (eight exits) and strategic sale (five exits). In terms of value, exits through strategic sale rank first in this quarter with exits worth US$ 154 million from five deals. Public market sale ranks second in terms of value, with exits worth US$ 110 million from eight deals.
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