New Delhi: Private equity (PE) and venture capital (VC) investments in India in January 2017 dropped 6.3% to $1.2 billion (about Rs8,037 crore) from a year ago, according to data compiled by accounting firm EY. This was also a sharp decline of 60% from December 2016.
The $1.6 billion buyout of Reliance Infratel by Brookfield had pushed up the overall numbers in December 2016.
In volume terms, there were 43 transactions in January, down 6.5% from a year ago, mainly due to a drop in the number of growth/expansion funding deals.
A single large deal—CPPIB’s acquisition of 48% equity stake in Global Logic for $720 million from Apax—accounted for 60% of the deal value.
“January 2017 investment numbers were influenced greatly by the large deal involving Global Logic, which was also one of the largest exits in recent times, reassuring LPs limited partners about the India story. The deal volumes were sustained on the back of steady early-stage VC activity which does not seem to have had any impact from demonetization,” said Mayank Rastogi, partner and leader for PE at EY.
“The Union budget on 1 February was also largely positive for the industry and especially so for start-up companies. There are, however, a couple of provisions like the introduction of thin cap rules which may have an adverse impact on investments in the infrastructure and real estate sectors,” he added.
Except for technology, all other sectors witnessed a drop in both value and volume, compared with January 2016, as well as the month prior to that. After being top contributors every month last year, real estate and financial services registered lower deal numbers, with $22 million (through one deal) and $23 million (via four deals), respectively. Among other sectors, food and agriculture performed well with $78 million across 7 deals — the highest monthly performance in over two years—while education was another sector to record a good number of deals totaling six for the month, the report said.
In January 2017, exits totalled $850 million across 13 deals, an increase of 32% and 107% in value terms over January 2016 and December 2016, respectively.
In volume terms, however, there was a 24% decline, compared with both January 2016 and December 2016.
The $720 million Global Logic partial exit by Apax (half of its total holding of 96%) accounted for 85% of the exit value in January 2017. There was no PE backed IPO in January 2017.