Start-up and early-stage investments maintained their momentum with 27 deals in November against 35 deals in October. Structured and debt deals contributed over a third of the total deal value at $326 million in November, of which more than 75 per cent were in real estate.
“There has been a slowdown in growth capital activity in the last few months and the lack of deal closures in November compounded the issue. This has been somewhat compensated by structured deals and refinancing in real estate and large buyout deals,” said Mayank Rastogi, partner and leader for private equity, EY.
“Exits were muted, but this might not reflect the reality as deals in the pipeline might be closed in the near future. There is enthusiasm around private equity exits and robust activity can be expected going forward,” he added.
The effects of demonetisation and the pursuant digital push of the government were not clear but these might affect deal activity in select sectors in the short-term, Rastogi said, adding it might translate into more deals in the financial technology sector. Deals over $100 million in November added up to $222 million, down from $1,418 million in the same month a year ago. This was compensated by $513 million in deals in the $50-100 million bracket against $110 million in November 2015.
Most of the deals above $50 million were in real estate, including three debt deals by Piramal, $112 million in seven projects of Adarsh developers, $75 million in ACME Cleantech and $54 million in the Urbana township project of the Ozone group.
Other top deals included a $110 million investment by Multiples in Arvind Fashion for a 10 per cent stake and a $75 million investment by Warburg for a minority stake in Rivigo Services, a logistics provider.
Real estate continued to be the top sector with $264 million invested through five deals in November. Technology dominated volumes with 12 deals. E-commerce lagged with just $5 million in two deals, the lowest in over 24 months.
The EY report said in November exits amounted to $63 million in 15 deals, a decline of 86 per cent by value from the same month a year ago. Buybacks accounted for 76 per cent of the exit value ($48 million in four deals).
There were two private equity-backed initial public offers in November, Varun Beverages and PNB Housing Finance. None of the private equity investors sold stakes in the IPOs.
November witnessed $445 million in fund raising, four times as much as in the same month a year ago. Fund-raising announcements stood at $828 million against $1.1 billion in October.