MoneyTree™ India Q2 2016

Indian private equity did reasonably well in the second quarter of 2016, with overall investments worth 4.3 billion USD across 147 deals. This represents a 2% increase in value as compared to the previous quarter, despite a 21% decrease in volume.

Despite e-commerce/consumer Internet investments slowing down considerably owing to valuation and profitability concerns, the IT & ITeS sector continued its dominance over other sectors, with investments of 1.6 billion USD in 92 deals. 

A number of new sectors have opened up for foreign investments, and are expected to draw corporate buyer interest as well. With the reform process looking reasonably irreversible and India firmly on the path of fiscal consolidation, private equity investors are should continue to remain busy in the coming quarters.

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Total private equity investments – Q2 2016

Investments by industry – Q2 2016

Interesting observations from this report:

The IT&ITeS sector continued to receive the highest level of funding among all sector this quarter. Deal making displayed an expected dip after the frenzy of deals in late 2015 and, measured against the second quarter of last year, both values and volumes dropped. Investments in the e-commerce segment have also declined and there is a slowdown in the investment scenario across the start-up ecosystem. Going forward, while investors may have a reduced appetite, newer investors will continue to invest in this segment for brighter ideas and teams. With consolidation starting to happen in the e-commerce segment and ongoing corrections around valuations, the focus on profitability will intensify the coming quarters.

Sandeep Ladda, Leader, Technology, PwC India

As compared to the same period of last year, the investment in BFSI has grown in the second quarter of 2016, but given the activity in the market, we were expecting more deals to close. So, it would seem that macroeconomic and political factors, including Brexit, the US elections and slow growth in major economies, are impacting the overall deals market. Since the financial sector is one of the first sectors to be impacted by the external environment, slower deal closing is reflective of market sentiments.

Bharti Gupta Ramola, Leader, Financial Services, PwC India

Power generation platforms—both conventional and renewable—are attracting considerable interest from long-term investors and funds. A common theme is to deploy these platforms for takeover of partly developed and distressed assets, with a strong technical partner in tow to improve the commercial viability of these projects.

Kameswara Rao, Leader, Energy, PwC India