Private fund investments in India seen at a 3-year low of $343 mn in February

India received investments worth $344 million from private equity and venture capital funds across 27 deals during February 2017, which is the lowest in three years, according to a report by consulting group Ernst and Young.

In value terms, the investments declined by over 70 per cent from February 2016 and January 2017, while deal volume fell by 50 per cent compared with February 2016 and 37 per cent from the previous month, according to the EY report.

Collectively, in January and February 2017, the investments totalled $1.5 billion and exits $1.4 billion.

This decline was precipitated by a sharp fall in both value and volume of deals across the stages.
While the monthly deal volume has been declining over the past couple of months, the aggregate deal volume was supported by large deals. However, February 2017 witnessed just two deals of over $50 million; more than 50 per cent of the deals were below $10 million in value.

Deal value and volume declined across sectors with only financial services recording a modest performance of $136 million across four deals.

Technology recorded the highest number of deals (8 deals), while RHC (one deal) recorded its lowest deal tally in two years. There were three e-commerce deals worth $75 million.

''Investment numbers took a dive in February due to lower deal volumes and decline in large deals. There was no deal above $100 million in February which last happened 18 months ago – however there are a bunch of large deals in the making which should make up for the decline in near term. The month again saw exits outpacing investments in value terms reaffirming the sustainability of PE industry in India,'' Mayank Rastogi, partner and leader for PE, EY said.

Exits in February 2017 totaled $554 million across 24 deals, an increase of 300 per cent compared with February 2016 - a decline of 35 per cent compared with the previous month.

February was primarily dominated by open market exits with Providence selling its 3.3 per cent stake in Idea cellular for $199 million and SAIF Partners exiting its balance 11 per cent stake in MakeMyTrip. There was one PE-backed IPO in February 2017 with an offer for sale by investors of BSE Ltd of almost $187 million in which GKFF Ventures exited its 2.25 per cent stake for $29.5 million.

February 2017 witnessed $850 million in fund raise, a 157 per cent rise over the previous month, however a 15 per cent decline compared with February 2016. Chrys Capital's fund raise of $600 million was the largest raise in the month. New fund raise plans announced in February 2017 stood at $913 million.

Though February recorded a poor show, there is news of many large deals in the making including mega deals of Brookfield (Hiranandani and Reliance Towers business), GIC investment in DLF commercial property business, Blackstone's investment in K Raheja's rental assets, Ola's fund raise of almost $330 million by Softbank etc.