Private equity and venture capital investments in Indian companies nearly halved to USD 908 million in November, mainly due to sharp fall in value of deals in the e-commerce space, a report said on Monday.
In November 2015, investments in private equity and venture capital was at USD 1.82 billion.
“PE/VC investments declined both in terms of value and volume in November 2016. This was mainly on account of two reasons -- sharp decline in both, value and number of expansion/growth deals and decline in the overall e-commerce investments,” leading consultancy EY said in a report.
E-commerce recorded lowest deal value and volume in over 24 months with USD 5 million invested across two deals.
“Expansion/growth investing declined 67 per cent as compared to October 2016 at USD 137 million. Structured/debt deals contributed more than one-third of the total deal value,” it added.
Most of the large deals (above USD 50 million) were in the real estate sector, which included three debt deals by Piramal -- USD 112 million in seven projects of Adarsh developers, USD 75 million invested in ACME Cleantech and USD 54 million invested in Urbana township project of Ozone group.
Other top deals included USD 110 million investment by Multiples in Arvind Fashion for a 10 per cent stake, and USD 75 million investment by Warburg for a minority stake in Rivigo Services, a logistics provider.
In terms of sectors, real estate continued to be at the top with USD 264 million invested across five deals in the month, while technology dominated the deal volumes with 12 deals and was primarily responsible for the healthy deal volume in the startup space.
“There has been a slowdown in the growth capital activity in the last few months and the lack of deal closures in November 2016 further compounded the same. This has been, somewhat, compensated by the structured deals/refinancing activity largely in the real estate sector and the large buyout deals.
“...the impact of demonetisation and pursuant digital push of the government is still not fully clear but it may end up impacting deal activity in a few select sectors in the short-term, e.g. it is likely to translate to more deals in the Fintech sector,” EY’s Partner and Leader for PE Mayank Rastogi said.
According to the report, exits plunged by 86 per cent in value terms to USD 3 million.
“Buybacks accounted for 76 per cent of the entire exit value (USD 48 million, four deals). There were two PE-backed IPOs in November 2016, Varun Beverages and PNB Housing Finance. However, none of the existing PE investors sold any stake in the IPO,” the report said.