Private equity investors sealed deals worth $7.22 billion in the third quarter of this year following which deal tally for the January-September period stood at $14.82 billion, says a report. According to assurance, tax and advisory firm Grant Thornton, in spite of uncertainty among PE investors on the impact of GST on potential investee companies, deal activity in the January-September period registered a 74 per cent growth as compared to the corresponding period previous year. “Private equity investments recorded their highest ever in the year to date at $15 billion,” said Prashant Mehra – Partner at Grant Thornton India LLP. Mehra noted “despite speculation that deal activity may slow down with fund managers taking a cautious approach towards fresh funding, value of private equity investments jumped by 74 per cent this year compared to the corresponding period in 2016”. The year was dominated by e-commerce and real estate sectors which accounted for 23 per cent and 17 per cent share, respectively.
On the other hand, start-up sectors continued to drive the PE volumes with over 330 investments worth $2 billion capturing 60 per cent of PE volumes, the report noted. In the July-September quarter, the overall deal value jumped sharply to $7.22 billion from $2.56 billion last year, while volumes declined by 37 per cent. The uptick in September quarter deal value was largely owing to big ticket PE investments.
Private equity investments are expected to pick up further in the December quarter as well as in 2018. “Increasing efforts by the government to ease GST transitioning and other ease of doing business in India initiatives like The Code on Wages Bill 2017, is expected to boost investment sentiment, enabling companies to tap markets for fund raising,” Mehra said.
He further noted that while the September quarter has concluded on a tepid note, mainly because of the effects of GST, the last quarter of 2017 is expected to end on a high note and 2018 is expected to emerge even stronger demonstrating significant growth in transaction activity.
“This growth will be fuelled by the upward looking economy for domestic M&A powered by PE as well as growing transaction on inbound transactions. All this will perhaps be an outcome of the several reforms the government has initiated in the last 3 years and the positive effect of that now coming out in end 2017-beginning 2018,” he added.