PE investments in August at lowest in 6 months, buyouts on rise: report
Private equity, venture capital firms invested about $1.6 billion in August, the lowest since February last year’s $1.4 billion worth of investments across 66 transactions
Mumbai: Private equity (PE) and venture capital (VC) firms invested about $1.6 billion in August, the lowest since February last year’s $1.4 billion worth of investments across 66 transactions, the PE Roundup report issued by EY on Thursday showed.
During the month, however, PE and VC firms raised more than $2 billion for their funds, the highest in the last one year indicating ample liquidity in the market.
A handful of large deals skewed overall investments by PE and VC firms in August, with buyouts being the flavour of the month.
Four deals accounted for 72% of the total investments with the buyout of 60% stake in Ramky Enviro Engineers Ltd by KKR & Co. for $530 million being the largest transaction. Power and utilities garnered the most investment across sectors at $532 million.
“In terms of stages of investment, buyouts led in terms of value of investments, with four deals worth $683 million, more than twice the investments received in August 2017,” the report said.
In terms of investment value, growth deals which have been “front-runners” are losing sheen.
“Expansion/growth deals, which otherwise are the front runners in terms of investment value, recorded just $467 million in investments (in August 2018) compared to US$4.5 billion recorded in August 2017,” EY stated in its report.
The month also put spotlight on the fund-raising environment. Nine PE/VC firms raised $2.1 billion in August alone with Sequoia Capital leading the pack with the close of its $695 million fund. Another $3 billion worth of funds were also raised during the month.
Majority of the PE and VC exits happened through open market with $480 million spread over eight deals. The number and value of exit transactions, however, witnessed a sharp dip in August 2018 as compared with the year-earlier month mainly on account of few large exits skewing the data.
In August 2018, $830 million worth of exits were recorded across 18 transactions as against $2.1 billion worth of exits across 32 deals a year earlier.
The number of exits in terms of value increased from $376 million in July 2018 to $830 million in August. Financial services saw maximum exits during the month both in terms of volume and value. The sector witnessed $381 million worth of exits through six transactions.
Temasek’s $225 million investment in ANI Technologies Pvt. Ltd (Ola Cabs) through secondary purchase, however, marked the biggest exit of the month. Helion Venture Partners, Accel Partners India and Bessemer Venture Partners exited through the transaction
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