MoneyTree™ India — Q4 2013

Q4 proved to be an exciting quarter for PE investment in India, with total flows exceeding 2 billion USD---the first time since Q4 2007. Almost 80% of the deal value was concentrated in the IT and Healthcare space. Activity in other sectors was largely muted. Whilst impossible to say how the mood will swing following the upcoming elections---and a lot will depend on how the next government addresses regulation concerns---the hope is that the momentum witnessed in Q4 will continue to remain in early 2014.

This quarterly study of private equity investment activity is based on data provided by Venture Intelligence and serves as a reliable source of current and recent trends in PE/VC funding. In addition to aggregate information, the report provides data cuts by industry, region, stage of development and exit. 

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Total PE investments 2004-Q4 2013
Total PE investments 2004-Q4 2013
Q4 2013 Investments by industry
Q4 2013 Investments by industry

Interesting observations from this report:

With the US market showing signs of recovery and with the increased attractiveness in the e-commerce space in India, there were not only an increased number of deals compared to the previous quarter, but also a substantial jump in the value. The steady increase of investments over the past few quarters in the Technology sector reinforces that this sector continues to be very attractive to the PE/VC community, and thus hints at the risk/reward relationship that it has to offer.
Sandeep Ladda, Leader, Technology, PwC India
In 2013, over a tenth of all PE investments were in the Healthcare space, a testament to lasting interest in the sector. Investments by KKR and Carlyle in Apollo Hospitals and Medanta, respectively, further reinforced their long-term bet in the sector. In the first quarter of 2014, we are likely to see further investments in hospital chains with pan-India networks. There is also a growing interest in models which use technology to make healthcare accessible. Mobile healthcare models focussing on disease management are likely to see investments in the coming year. The spectrum of single speciality hospitals is also likely to expand to include more clinical specialties and many of these models will seek early-stage funding.
Dr. Rana Mehta, Leader, Healthcare, PwC India
Manufacturing deals have fallen significantly echoing sector trends. Also, the trend in secondary deals reflects the challenge around providing exits to current investors. We expect improvement in the deal scenario around the manufacturing sector following a revival of positive sentiments after the general elections.
Bimal Tanna, Leader, Industrial Products, PwC India
Despite a reduction in the number of exits from the previous quarter, the exits in the BFSI sector of approximately 193 million USD for the quarter ended 31 December 2013 represented normal activity that is expected to continue for the near term. The BFSI sector continues to react to recent regulatory developments as well as to asset quality and capital challenges.
Manoj Kashyap, Leader, Financial Services, PwC India