PE investments in India falls in first 9 months of 2018; this is what dented investor confidence

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Updated: October 23, 2018 5:58:15 PM

During the January-September period of 2018, a total of 621 deals worth $14.60 billion were reported as compared with $15.60 billion in the same period last year.

modi government, narendra modi, money, voters, election campaign, 2019 elections, lok sabha election 2019Startups had a share of about 46% of the total investment volumes.

With the rupee taking plunge against the US dollar and touching its all-time low amid an investors exodus from the emerging markets, the private equity investors are too turning cautious due to macroeconomic concerns, market volatility and valuations of companies, among other things, according to Grant Thornton’s latest PE Dealtracker. The PE investors’ confidence has been dented, leading to a decreased capital inflow of $14.60 billion in India during the first nine months of the current year.

During the January-September period of 2018, a total of 621 PE deals worth $14.60 billion were reported as compared with $15.60 billion in the same period last year. On the other side, the July-September quarter saw a total of 217 PE deals worth $5.2 billion, an increase of 41% in terms of the number of deals, despite a drop in value by 28%, compared with the same period last year, the report added.

Telecom, e-commerce, manufacturing, energy, agriculture banking and IT sectors led the deal activity, capturing 85% of the total deal value. Startups had a share of 46% of the total investment volumes. Financial technology also attracted significant attention from investors with 20 deals, followed by retail and health tech segments. “The environment for private equity market has been sluggish due to concerns like the economy, market volatility and valuations, among other things,” said Prashant Mehra, Partner, Grant Thornton India LLP, in the report.

According to the report, some of the top deals during the third quarter in 2018 include Abu Dhabi Investment Authority (ADIA and PE firm TPG Capital’s $4.2 billion investment in UPL Corp; KKR’s investment for a controlling stake in Ramky Enviro Engineers Ltd (REEL); Udaan raising $225 million in series C funding. The report also noted that $120 million funding raised by Curefit marked the biggest ever fundraise by an Indian healthcare startup.

Further, Mehra added that the consulting firm expects an increase in the PE activity due to the government’s focus on offering a fertile ground for digitisation and tech investment through policy initiatives by incubating tech funds with traditional banks.

The Indian rupee has depreciated about 15% since January this year against the US dollar.  On Tuesday, after opening at 73.69 against the US dollar, the rupee remained flat after touching an intraday high of 73.52 and a low of 73.82 per US dollar.

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