As per EY’s Private Equity Monthly Deal Tracker – February 2019, investments worth US$2.6 billion across 61 deals and exits worth US$472 million across 10 deals were recorded. Both investments and exits were backed by improvement in deal activity in listed securities as stability emerged in the financial markets after witnessing significant volatility in the past months.
Speaking about the PE landscape, Vivek Soni, Partner and National Leader – Private Equity Services, EY said, “After a relatively subdued start in to the year, February 2019 has been a good month, recording strong performance in both investments and exits. As market volatility has reduced, both PE/VC investments and exits in listed companies have bounced back.
With large investments by Softbank and buyouts by funds like Blackstone, True North, AION etc, the large share of PE/VC funds for deals appears to be strong, notwithstanding ensuing uncertainties around global growth and impending general elections in India. Underlying deal activity remains robust across large and mid-sized deals, although valuations appear to have corrected for many sectors compared to pre-September 2018 levels. We think 2019 could very well be one of the best vintages year for Indian PE/VC investments.
Investments
When it comes to investments, February 2019 recorded US$2.6 billion in PE/VC investments, 51% higher compared to February 2018 and 41% higher compared to the previous month. The growth was driven by higher number of large deals (deals of value greater than US$100 million). February 2019 recorded nine large deals aggregating US$1.8 billion compared to four large deals aggregating US$655 million in February 2018 and four large deals worth US$1 billion in January 2019. SoftBank and Carlyle’s US$415 million investment in Delhivery was the largest deal in February 2019 and also the largest PE/VC deal in the logistics sector ever.
From the type of investments point of view, Growth investments, at US$1.2 billion, were 27% higher compared to February 2018. Private investment in public equity (PIPE) investments recorded a rebound in February 2019, emerging from a four year low of US$2.8 million recorded in January 2019. At US$431 million, PIPE investments in February 2019 peaked in past eight months.
February 2019 recorded two Buyouts worth US$262 million, compared to four Buyouts worth US$273 million in February 2018. Start-up investments in February 2019, at US$156 million across 32 deals, were 52% lower compared to US$325 million recorded across 31 deals in February 2018. Credit investments in February 2019, at US$548 million, have been highest in previous 12 months on the back US$350 million debt funding of ReNew Power by Overseas Private Investment Corporation (OPIC), the US Government’s development finance institution.
From a sector point of view, financial services (US$712 million across 13 deals in February 2019 vs US$619 million across 13 deals in February 2018) was the top sector followed by logistics (US$470 million across four deals in February 2019 vs one deal of US$2 million in February 2018), which recorded its highest ever monthly investment on the back of the large investment in Delhivery. E-commerce (US$35 million across five deals in February 2019 vs US$362 million across nine deals in February 2018), which is generally among the top sectors recorded a sharp decline in deal value.
Exits
Exits in February 2019, at US$472 million, were almost triple the value recorded in February 2018. This was on the back of a rebound in open market exits in wake of the volatility in the stock markets subsiding. There were four open market exits in February 2019 worth US$351 million, more than thrice the value recorded in February 2018 and highest in past six months. There was one PE-backed IPO in February 2019 that saw Goldman Sachs and Kuwait Investment Authority backed Chalet Hotels Limited list on the bourses. The largest exit in February 2019 saw Bain Capital and GIC sell 5% stake in Genpact for US$324 million.
From a sector point of view, technology was the top sector, primarily on account of the large Genpact deal.
Fund raise
February 2019 saw funds worth US$285 million being raised and fund raise plans worth US$779 million being announced. US$250 million raised by India life sciences fund for its third fund was the largest fund raise in February 2019.
