PE, VC investments rise to $1.5 billion across 63 deals in July

PE, VC in investments in July rose 23 per cent in value compared with July 2017. Year-to-date, PE and VC investments till July 2018 crossed $16.9 billion, according to EY’s private equity monthly Deal Tracker.

"Notwithstanding headwinds at a global as well as the domestic level, Indian PE and VC investment activity has maintained a steady run rate so far, clocking an average of $2 billion worth of PE and VC investments per month in 2018. As of now, we see no reason to alter our initial projections made in the beginning of 2018, it appears we are well on track to witness another record year for PE and VC investments in India" Vivek Soni, partner and national leader, private equity services, EY, said.
"Exit activity, on the other hand, has been somewhat dampened by the volatility seen in the stock markets over the recent past, especially in the mid-cap and small-cap spaces. Nonetheless, there is a good amount of deal activity underpinned by the secondary and strategic sale segments and we expect the second half of 2018 to be as good as the first half for exits as well,” he added.
July 2018 recorded $1.5 billion in deal value, at par with investments recorded in July 2017. In terms of deal volume, investment activity increased by 50 per cent to 63 deals in July 2018, compared with 42 in July 2017.
Breaking away from recent trends, July 2018 recorded fewer large size deals. There were three deals of value less than $100 million (cumulatively worth $402 million) in July 2018, accounting for only 26 per cent of total investments as against a 65-per cent investment share in June 2018.
The fewer number of large deals in July is no indication of a trend, as there are many mega deals in the works, the most prominent being the recently announced $4.2 billion acquisition of Arysta LifeScience, an agrochemicals company by UPL.
TPG was the most active PE investor in July 2018 with four deals, including a $105-million investment in Sai Life Sciences for a 35-per cent stake, $40 million investment in e-commerce platform Livespace and co-investments with a group of other investors in online ticketing platform Bookmyshow and an NBFC, Five Star Business Finance.
In terms of stages of investment, expansion and growth investments continued to lead in terms of value of investments, with 20 deals worth $633 million, 23-per cent higher compared with July 2017; while startups ranked at the top in terms of number of deals (33 deals). July saw $431 million invested in startups, highest monthly value in 2018. Buyouts on the other hand, recorded the lowest monthly value of investments in 2018, with two deals worth $100 million.
From a sector point of view, real estate ($669 million) and financial services ($299 million) were the most active sectors in terms of value of investments. In terms of number of deals, technology with 16 deals was the leader.
Infrastructure and real estate sectors recorded $392 million in investments across five deals. The largest deal in these sectors was KKR’s $176 million credit investment in real estate projects of Lodha and Shapoorji Pallonji.
July 2018 recorded 11 exits totaling $376 million, a slight increase of 6 per cent compared with July 2017 ($352 million across eight exits).
Open market exits led with deals worth $156 million across six exits followed by two secondary exits worth $105 million. There was one PE backed IPO in July 2018, which saw TA Associates part exit its stake in TCNS Clothing, which owns the women’s wear brand “W”, for $72 million.
From a sector perspective, financial services and pharmaceuticals were the leaders with one deal each of value $110 million and $105 million, respectively. The largest exit in July 2018 saw IFC sell its 4 per cent stake in AU Small Finance Bank for $110 million.
Fund raise
July 2018 witnessed five fund raises worth $807 million. There were $1,268 million worth fund raise plans announced in July 2018. The largest fund raise of $550 million was made by Indospace for investments into industrial parks.