Private equity and venture capital (PE/VC) deal tally in August dropped to 39 transactions totalling USD 1.01 billion, weighed down by fall in e-commerce investments, says an EY report.
On a year-on-year basis, both deal value and volume were lower by 37 per cent and 51 per cent respectively, mainly due to slowdown in the e-commerce segment.
The e-commerce space had seen transactions worth USD 55 million across six deals in August 2016 as against USD 554 million across 22 deals in August 2015.
On a positive note, however, total investments crossed USD 1 billion mark after remaining below it for three months in a row. Moreover, this was a moderate uptick of 13 per cent in value terms over July 2016.
Though the number of deals in startup and early stage segment was marginally lower, in value terms it managed to reach the highest for the year, mainly on account of USD 175 million invested in messaging app Hike by Softbank, Tiger Global and Tencent.
“The increase in large sized deals helped shore up investments in August 2016 over previous month with 61 per cent of the deal value coming from larger deals of USD 50 million and above, primarily into technology sector,” EY said.
There were three deals of USD 100 million and above aggregating to USD 440 million in August 2016. Major investments included USD 175 million investment in Hike, USD 140 million in TCNS Clothing by TA Associates and USD 125 million logistics platform of ex-Future Supply Chain CEO, Stellar Value Chain Solutions funded by Warburg Pincus.
Meanwhile, exits almost doubled to USD 486 million from USD 260 million in August 2015 on the back of PE-backed IPOs. There were three PE-backed IPOs in August 2016 (RBL Bank, Dilip Buildcon, and SP Apparels). The PE-backed IPO tally for 2016 so far is 12.
“2015 was a year of e-commerce and 2016 is turning out to be a year of exits. We have had some very large exits and highly successful PE-backed IPOs and for the first time, exits are more than 50 per cent of the investments so far during the year,” EY Partner and Leader for PE, Mayank Rastogi, said.
Going forward, Rastogi said though the investment activity may have slowed down compared to 2015, it still remains quite robust.
“With increased activity in distressed space, the investment activity should only pick up in months to come,” he added.