Investments worth USD 1.6 billion across 50 deals were recorded in August this year, with buyout transactions increasing more than twice in terms of value compared to the same month last year, an EY report said. Private equity and venture capital (PE/VC) investments till August 2018 have crossed USD 18.7 billion, 9 per cent higher compared to the same period last year, according to EY’s Private Equity Monthly Deal Tracker report released Thursday.
As per the report, August 2018 recorded USD 830 million across 18 exits. “PE/VC activity continued its strong run with USD 1.6 billion investments received in August 2018. Till August-end, the sentiment towards India remained strong, with funds further adding to their dry powder, as evidenced by USD 2 billion raised during the month, adding to the already high levels of dry powder of close to USD 40 billion available for investment into India,” said Vivek Soni, Partner and National Leader Private Equity Services, EY.
The Indian PE/VC industry appears to have come of age, with PE/VC-backed platforms attracting marquee global investors like Berkshire Hathaway, which recently announced an investment of USD 300-USD 400 million in Paytm, he said. August 2018 recorded USD 1.6 billion in deal value, at par with investments recorded in the previous month, however, a 71 per cent drop compared to August last year, the report said.
In terms of deal volume, investment activity in August 2018 was at par with deals recorded in the same month last year. The report further said that August 2018 recorded four deals of value greater than USD 100 million (cumulatively worth USD 1.1 billion). KKR’s USD 530 million buyout of 60 per cent stake in Ramky Enviro Engineers Ltd was the largest deal in August this year.
In terms of stages of investment, buyouts led in terms of value of investments, with four deals worth USD 683 million. Power and utilities recorded highest value of investments at USD 532 million, whereas technology led in terms of number of deal with seven deals.
As per the EY report, August 2018 recorded 18 exits totalling USD 830 million, double the value compared to July this year. However, compared to August last year, exits have declined by 61 per cent in terms of value. The largest exit in August 2018 includes USD 225 million part exit from Ola, by Helion Ventures, Accel India, Bessemer and others in a secondary sale to Temasek, it added.
“Exits, however, have experienced headwinds given the volatility in the broader markets. With the sudden depreciation seen in the INR/USD rate in September, we expect investors to turn cautious, on account of which deal closures could get delayed.
“That said, the successful closure of the Walmart-Flipkart deal in the first week of September is expected to infuse renewed vigour into the Indian PE/VC industry especially the early stage funding eco-system. This USD 16 billion deal takes the 2018 exits USD value to an all-time high of over USD 23 billion. With one quarter still left to go, 2018 exits appear to be on track to exceed 2017 exits by over 2x,” Soni added.