Private equity investments drop by 50% to $3.2 bn in Q3FY16

Private equity invesments dropped by around 50 per cent during the quarter ended September 2016 to about $3.2 billion across 125 deals as against $6.5 billion across 224 transactions, a year ago. These figures include venture capital investments, but exclude PE investments in real estate.

Compared to the immediate previous quarter the drop was about five per cent.

According to Venture Intelligence data, the latest figures take the PE investments in the first nine months of 2016 to $10.6 billion across 443 transactions down by 23 per cent compared to $13.8 Billion across 594 deals in the same period in 2015.

The latest quarter witnessed 10 PE investments worth $100 million or more to 17 such transactions in the same period last year and five during the immediate previous quarter.

The largest PE investment announced during the third quarter of 2016 was the $300 million raised by Paytm from Taiwan's Mediatek, China'a Alibaba and VC firm SAIF Partners. The next largest were Goldman Sachs' $250 million investment in Essel Highways followed by the $175 million raised by messenger firm Hike from China's Tencent, Taiwan's Foxconn and US-based Tiger Global.

IT & ITeS companies accounted for 36% of the PE investment pie in Q3FY16 attracting $1.1 billion across 65 transactions. The value of IT & ITeS investments in Q3FY16 was down 68% from $3.6 billion across 132 deals in the same period in 2015. However investments in BFSI have more than doubled following $100 million+ investments in India Infoline Finance, National Stock Exchange and Hero Fincorp.

VC flow

Venture capital investment flow also dropped by around 50 per cent. During the third quarter 76 investments worth $392 million were reported as against 153 investments worth $657 million, a year ago, according to analysis by Venture Intelligence. The activity level was also 22 per cent lower compared to the immediate previous quarter, which witnessed 98 deals worth $292 million.

As VC type investments cap out at $20 million per round under Venture Intelligence definitions, follow on investments raised by companies like Hike, Druva, Byjus Classes etc. are not included in this analysis, said the research firm.

The latest data takes the VC investments in nine months of 2016 to 290 deals worth around $1 billion down 24 per cent compared to 381 deals worth $1.5 billion in the same period 2015.

The larger sized VC investments during Q3FY16 were SME lender Lendingkart raising a $20 million Series B round led by new investor Bertelsmann India followed by the $17 million Series B investment in hotel aggregator Treebo Hotels (also led by Bertelsmann India with participation from existing investor SAIF and Matrix Partners) and enterprise software firm Innovacer's $15.6 million Series A round from WestBridge.

Information Technology and IT-Enabled Services (IT & ITES) companies, at 52 deals worth $240 million, attracted 68 per cent of the VC investments (61% in value terms). Healthcare & Life Sciences companies followed a distant second attracting 7 investments worth $63 million. IT & ITES investments during the latest quarter were however down from the 104 deals recorded in Q3 2016.

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