MoneyTree™ India — Q1 2013

The first quarter of 2013 started on a weak note for the private equity (PE) industry. For the first time since 2009, the aggregate PE investments fell below a billion dollars for the first quarter. At 929 million USD, PE deal values were 56% lower as compared to Q1 '12, and 18% lower than Q4 '12. We expect much greater commitment from PE investors in the next two quarters. While consumer, technology, logistics and healthcare sectors look favourable from an investment point of view, we also expect deal activity to return to the 'core' sectors (i.e., infrastructure and capital goods), as well as the financial services sector.

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. With technology and innovation coming of age in many emerging countries, these fast-growing markets are important destinations for private equity. See of further interest box at right to find a link to the current MoneyTree™ Russia report. In addition, in a few months look for the debut of the MoneyTree™ China report covering Q1 and Q2 of 2013. Together with our US MoneyTree™, these reports will help you compare trends in various parts of the world and provide a truly global view of VC/PE investments.





Preview some charts inside this report

Click on a figure below to see a full-size version

Q1 2013 Investments by industry
Q1 2013 Investments by industry		 Total PE investments 2004-Q1 2013
Total PE investments 2004-Q1 2013

Interesting observations from this report:


"Traditionally, the IT-ITeS sector usually sees the highest value and volume of investments. However, we have seen a marked drop in the investments this quarter, which can be attributed to the uncertain macro-economic and political environment. Most of the players in the online services segment, which typically attracts most investments in this sector, continue to struggle to turn cash positive. As a result, investors are critically evaluating the existing business/revenue models and are not willing to invest in ‘me-too’ ventures."
— Sanjay Dhawan, Leader, Technology, PwC India
"In recent years, healthcare has seen major investments from PE players to the tune of over a billion dollars. The PEs are also making healthy exits, even though the IPO market is not at its best. Most of the exits have come in the form of secondary sale to the new PE partners in the company and, in many cases, with additional investments. It is clear that the interest in the sector has increased as investors have realised that this segment is weatherproof and also provides several exit channels."
— Dr Rana Mehta, Leader, Healthcare, PwC India
"The revival of investment in the energy sector, even if it is dominated by a single deal in this quarter, suggests strengthening of an important trend. In the conventional energy space, higher power procurement costs under recent competitive tenders suggest bidders are factoring in various fuel disruption risks. The renewable energy projects thus appear more attractive in comparison, despite the uncertainties. Hence, they are attracting renewed investment interest.

It is noteworthy that this revival in renewable energy is taking place despite erosion of subsidies and operational support previously extended by the government and utilities respectively. We expect to see further investments flowing in, both from independents and from large energy users seeking a long-term hedge against sharp increase in retail tariffs seen in many states."
— Kameswara Rao, Leader, Energy, Utilities and Mining, PwC India