Lack of big-ticket deals drive down PE/VC investments in January 2019

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February 24, 2019 6:51 PM

January 2019 saw a 49% decline in the total deal value compared to January 2018 and 43% fall vis-a-vis December 2018, EY said in a report.

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Lack of over $1 billion private equity/venture capital (PE/VC) deals in January this year has led to a 49% decline in the total deal value compared to January 2018 and 43% fall vis-a-vis December 2018. The month saw deals worth $1.8 billion, said a report by professional services firm EY.

“This decline was mainly on account of the absence of a large US$1 billion-plus deal in January 2019, whereas both January 2018 and December 2018 had one large US$1 billion-plus deal each,” EY said.

“We believe this data is skewed on account of the absence of large deals in January 2019,” said Vivek Soni, Partner and National Leader – Private Equity Services, EY.

There were four deals over $100 million in January 2019 worth $1.1 billion. However, January 2018 had recorded five such deals worth $2.8 billion even as December 2018 saw six investments totalling $2.3 billion.

The biggest deal in January 2019 $397 million raised by kids and baby products’ online retailer First Cry from SoftBank. Other deals in $100+ million bracket included $230 million raised by data analytics startup Fractal Analytics from PE firm Apax Partners and AION Capital Partners acquisition of BPO company Interglobe Technologies for $230 million.

AION is a joint venture between Indian PE firm ICICI Venture and US-based alternative asset management firm Apollo Global Management.

However, there was a 65% increase in the number of deals on a year-on-year basis, the report said.

Investments in startups saw $343 million poured across 56 deals. This was 46% higher in terms of deal value and more than 46% up from deal volume perspective compared to January 2018.

In terms of top sectors, e-commerce received $607 million across 11 deals followed by $438 million across nine deals in technology.

Timid Exits

Similar to PE/VC funding, exits too were timid in January. The month churned out $360 million from 13 exits against $969 million from 29 exists in January 2018, largely due to lack of high-value exits.

TA Associates and Khazanah exit from Fractal Analytics via a secondary sale to Apax Partners for $200 million was the largest exit deal.

“Private investment in public equity (PIPE) and open market/IPO exits have declined materially on account of weakness/volatility in the capital markets, which we think is transient,” said Soni.

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