PE firms pump in $1.12 billion in January

Private equity firms invested $1,120 million (around Rs 7,600 crore) in domestic firms last month, registering a marginal decline over the same period last year owing to smaller average investment sizes.

According to assurance, tax and advisory firm Grant Thornton, there were 97 transactions worth $1,120 million in January 2016, while 71 such deals worth $1,148 million were made in January last year.

“Despite strong PE investment momentum with volumes increasing 37 per cent (year-on-year), value continued to remain stable due to smaller average investment sizes as compared to January 2015,” the Grant Thornton report said.

Sector-wise, PE or VC investments in IT and ITeS displayed significant traction and contributed 80 per cent of the total deal volumes. Within this sector, the e-commerce space continued to dominate with more than 57 investments last month.

The top deals of the month include online auto classifieds platform CarTrade raising $145 million in funding, led by Temasek and March Capital, and global investment bank Goldman Sachs’ $66 million investment in Hotel investment and development firm SAMHI Hotels. “With the increase in PE activity and in lieu of lack of acquisition financing in India, Domestic M&A is expected to rise on the back of pickup in alternate buy out financing by PEs,” Grant Thornton India LLP Partner Prashant Mehra said. New research from Grant Thornton’s International Business Report (IBR) reveals that going into 2016, India ranked number one in terms of business optimism about the economic outlook.

“Hopefully, this optimism along with certain key measures which the government is taking will help accelerate growth in deal activity in 2016,” Mehra added.

Meanwhile, overseas investors have pulled out a massive Rs 4,600 crore from the Indian capital markets this month so far, primarily on account of continuous fall in crude oil prices and fears of a global slowdown.

This has taken the total outflow to Rs 13,414 crore ($1.97 billion) since the beginning of the year. According to the data available with depositories, foreign portfolio investors (FPIs) took out Rs 4,503 crore from equities during February 1-18 while they withdrew Rs 96 crore from debt market during the same period, leading to a net outflow of Rs 4,599 crore ($673 million).

Prior to that, FPIs pulled out a net Rs 13,381 crore from equities while they infused Rs 3,274 crore in debt in January.

Capital inflow by FPIs is often referred to as hot money because of its unpredictability though it continues to remain one of the key drivers of the stock market.