New Delhi: Private equity (PE) investments in India amounted to $16.3 billion across 652 deals in 2016, a decline of 18% in terms of value and 23% in terms of volume as compared to last year, according to a report released by global consulting firm PricewaterhouseCoopers on Monday. It does not include real estate deals.

In 2015, India witnessed PE investments worth $19.8 billion across 852 deals.

Technology and e-commerce together accounted for around 31% of the total PE investments in 2016 (as on 15 December), the report said.

Financial services received PE investments of $2.7 billion during the year. The majority of investments in financial services was in the non-banking financial companies/micro-finance institutions space.

Energy was among the other sectors that saw increased activity during the year. The sector received PE investments of around $2 billion, an increase of 41% from last year, led by an increased interest in the renewables space.

While manufacturing attracted PE investments worth $1.2 billion (up 25% from last year), the telecom sector reported the largest deal this year with Reliance Communications Ltd agreeing to sell a controlling stake in its tower assets housed under Reliance Infratel to Canada’s Brookfield Asset Management for around $1.7 billion in October.

The consumer and retail sector too picked up marginally with PE investments worth $ 0.7 billion in 2016, up 18% from 2015.

However, healthcare sector (excluding life sciences, pharmaceuticals and medical devices and apps) witnessed a 16% decline in value, with $0.6 billion invested across 24 deals.

“Even though 2016 saw lower levels of PE investments, it is noticeable that PE investments across 2015 and 2016 broke through the $9-11 billion levels of the previous 3-4 years; likewise, the exit levels across the two years have been significantly higher than previous years," PwC India’s leader of private equity Sanjeev Krishnan said.

“2017 is expected to see some volatility owing to a host of domestic and global factors and this could make it an interesting year for private equity investors in India," he added.

On the exits front, the year saw 198 deals totalling $7.2 billion, a decline of 25% in terms of value as compared with $9.5 billion worth of exits last year.

The volume of exits also dropped by 27% between from 2015, the report said.

In terms of sectors, manufacturing witnessed the maximum exit activity ($2 billion), followed by technology and e-commerce ($1.5 billion) and financial services ($1.1 billion).

Over 42% of the exit value was contributed by strategic sales, and this could be a precursor to higher corporate buyer activity in 2017.

“The impact of demonetization on businesses would be evident in the first half of 2017. It is quite likely that certain businesses would get impacted by it, and would need to re-align their business strategies post that, in particular their short-term goals," the report said.

“The goods and services tax is also expected to come into force in 2017—both of these could impact India’s growth trajectory, and investors would watch out for the impact thereof, which is expected to go beyond the traditional consumer-centric businesses," the report added.

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