Private equity (PE) and venture capital (VC) investments in India increased 13% to $5 billion in the quarter ended 31 March, Bain & Co. said in a report released last week.
Investments rose in the first quarter of 2017 from a year earlier despite a 33% drop in the number of transactions during the period. PE investments stood at $4.4 billion in the year-earlier period.
A few large deals contributed disproportionately to overall deal value. The top 15 transactions accounted for about 76% of total deal value in the March quarter from just about 50% in the year-earlier period.
Some of the major deals in the quarter included Canada Pension Plan Investment Board (CPPIB) and Caisse de Depot Quebec (CDPQ) buying a 1.5% stake in Kotak Mahindra Bank from Uday Kotak for Rs2,254 crore; Bharti Airtel Ltd selling a 10.3% stake in its tower unit for about Rs6,193.9 crore to a consortium of investors that included KKR & Co. and CPPIB; Apax Partners selling about a 48% stake in GlobalLogic Inc. to CPPIB, among others.
The consumer technology sector saw a 21% drop in terms of deal value and a 27.4% decline in terms of deal volume in the first quarter of 2017 from a year earlier.
There was, however, a significant increase in large deals (more than $50 million) across key sectors including telecom, consumer technology, financial services and logistics. Besides, the average transaction size rose 69% to $32 million from a year earlier, while deals worth less than $10 million comprised 66% of total activity in the quarter.
The number of investor exits rose 26% to 48 in the March quarter from a year earlier. However, the total transaction value of exits dropped 4% to $2.6 billion in the quarter.
Consumer tech, real estate and BFSI (banking, insurance and financial services) were key sectors that witnessed exits during the period. Strategic sales were the preferred exit mode and the top 10 exits contributed about 80% of total value. “The first quarter of 2017 saw a strong momentum of exits in line with the trend we saw in 2016. Consumer Tech and Internet world is witnessing consolidation.” said Madhur Singhal, partner at Bain & Co.