PE exits see threefold rise in February; investments at three-year low: EY data

Open market exits dominated the month with Providence Equity Partners selling its 3.3% equity in Idea Cellular for an estimated $199 million


February also saw a PE-backed IPO with an offer for sale by investors of Asia’s oldest stock exchange BSE Ltd of almost $187 million. Graphic: Subrata Jana/Mint
February also saw a PE-backed IPO with an offer for sale by investors of Asia’s oldest stock exchange BSE Ltd of almost $187 million. Graphic: Subrata Jana/Mint

New Delhi: Exits by private equity (PE) firms in February were worth $554 million across 24 deals, marking an over threefold increase from the $118 million secured from 15 exit deals in the same period last year, according to data provided by EY consultancy.

However, there was a decline of 35% in exits value when compared with the previous month.

Open market exits dominated the month with Providence Equity Partners selling its 3.3% equity in the telecom operator Idea Cellular for an estimated $199 million and SAIF Partners exiting its remaining 11% stake in MakeMyTrip.

February also saw a PE-backed initial public offering (IPO) with an offer for sale by investors of Asia’s oldest stock exchange BSE Ltd of almost $187 million, in which GKFF Ventures exited its 2.25% stake for $29.5 million.

Apart from exits, February 2017 also saw a jump of 157% in fund-raising to $850 million over the previous month. However, it marked a 15% fall over February 2016. The largest fund-raising during the month was by Chrys Capital —at the close of a $600 million fund. Besides, new fund-raising plans announced in February 2017 stood at $913 million.

Meanwhile, overall PE investments in the month stood at $343 million across 27 deals, which is the lowest in over three years in both value and volume terms.

PE/venture capital (VC) investments dropped by over 70% compared to $1.2 billion in February 2016 in value terms, while deal volume fell by 50% compared to February 2016 and 37% compared to the previous month.

In addition, more than 50% of the deal value was accounted for by just three deals—Fairfax’s $75 million investment in financial services company IIFL, Temask’s $55 million investment in used car marketplace cartrade.com and Xander Finance’s $44 million buyout of Express Trade Tower in Noida from IL&FS.

While the monthly deal volume has been declining over the past couple of months, the aggregate deal volume was supported by large deals.

Even so, there were just two deals worth over $50 million in February—the Fairfax and Temasek investments.

More than 50% of the deals were below $10 million in value.

Deal value and volume declined across sectors with only financial services recording a modest $136 million across four deals, EY said. Technology registered the highest number of deals (8 deals), while RHC’s (Real Estate, Hospitality & Construction) single deal marked its lowest tally in two years.

There were three e-commerce deals worth $75 million, including a $15.2 million investment in online furniture company Urban Ladder by Kalaari Capital, SAIF Partners, Steadview Capital and Sequoia Capital.

“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 (the) near term, ” said Mayank Rastogi, Partner and Leader for PE, EY.

Some of these ‘mega deals’ in the making include Canadian asset management company Brookfield’s investment in Reliance Communications Ltd’s mobile towers business, GIC’s investment in DLF’s commercial property business, Blackstone’s investment in K Raheja’s rental assets and app-based cab aggregator Ola’s fund raise of around $330 million by SoftBank.

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