Private equity, venture capital deals slump 50% in September quarter

While PE firms invested about $3.2 billion across 125 deals, VC firms injected $392 million through 76 deals during the period

Graphic: Naveen Kumar Saini/Mint
Graphic: Naveen Kumar Saini/Mint

New Delhi: Private equity (PE) and venture capital (VC) investments in the July-September period fell 50% from a year ago, data collated by research and analytics firm Venture Intelligence showed.

While PE firms invested about $3.2 billion in Indian companies across 125 deals, VC firms injected $392 million through 76 deals during the period.

In the same quarter in 2015, PE firms had closed 224 transactions worth $6.5 billion and VC investments worth $657 million were recorded across 153 deals.

Compared with the three preceding months, PE and VC investments were lower by 5% and 22%, respectively.

On the other side, while the nine-month period through September 2015 saw 594 PE deals valued at to $13.8 billion, the comparative figure for this year is 443 PE deals worth $10.6 billion. This is a decline of 23% year-on-year.

VC firms in nine months of 2016 hit 290 deals (worth $1 billion), down 24% compared with 381 deals (worth $1.5 billion) in the same period 2015.

There were 10 PE investments worth $100 million or more in the three-month period compared to 17 such transactions in the same period last year and five during the immediate previous quarter, data showed.

During the quarter, the largest PE investment was the $300 million raised by One97 Communications Ltd, which runs Paytm, from Taiwan’s MediaTek Inc., China’s Alibaba Group Holding Ltd and venture capital firm SAIF Partners.

The other big deals were Goldman Sachs’ $250 million investment in Essel Highways Ltd, followed by the $175 million raised by messenger firm Hike Inc. from China’s Tencent Holdings Ltd, Taiwan’s Foxconn Technology Co. Ltd and US-based Tiger Global.

As for sectors, IT and ITeS companies accounted for 36% of the PE investments in the period, raising $1.1 billion across 65 transactions, followed by the banking, financial services and insurance (BFSI) sector, which received $861 million.

Meanwhile, larger-sized VC investments during the quarter included $20 million Series B investment in SME lender Lendingkart by new investor Bertelsmann India; $17 million Series B investment in hotel aggregator Treebo Hotels (also led by Bertelsmann India with participation from the existing investors SAIF Partners and Matrix Partners) and enterprise software firm Innovacer’s $15.6 million investment.

In terms of volume or number of deals, Bengaluru continued to be the top destination for VC investments in the September quarter with 34% of the deals, followed by the National Capital Region which accounted for 25%. Mumbai came third with a 23% share.