Angel and seed investments grew 16 per cent to 368 deals in the first half of the current calendar year from 317 deals a year ago. But, only 643 private equity deals worth $5.8 billion were recorded in the first half of 2016 calendar year, a dip of 46 per cent in the same period last year. While the Southern states like Karnataka continue to top in cornering investor capital, North Indian states like Rajasthan and Punjab pip Western states like Maharashtra in deal volume and value growth, states News Corp VCCEdge Half-yearly India Deals Report for the first half ending June 2016.
Some of the highlights from the report are as below:
Regions that mattered
Country's financial capital, Mumbai, continues to be a hotbed for M&A deals, while Delhi NCR cornered the private equity activity in the country.
- Karnataka with 144 deals worth $2,318.76 million beat Maharashtra with 141 deals worth $1,141.91 million. Karnataka saw growth in total deal value up 33 per cent, but a drop in number of deals to 19 per cent compared to the same period last year.
- Delhi, which registered 98 deals worth $ 508.76 million, stood at third place in terms of volume, while Haryana, which attracted $ 735 million through 49 deals was in third in terms of value.
- Rajasthan and Punjab were the main drivers in attracting investor capital into North India. Punjab saw a growth of 885 per cent in deal value to $154 million as against $15.6 million in the first half last year. Rajasthan saw a growth of 108 per cent in deal value to $161.58 million against $77.76 million the year-ago period.
Sectors that mattered
Information Technology, Financials, Industrials, Consumer Discretionary, and Utilities were the top five sectors to attract significant private equity capital during the quarter.
- Number of deals in IT increased (as against a reduction in all other sectors) but total value slipped slightly compared to first half of calendar year 2015.
- Healthcare saw a 14 per cent drop in number of deals.
PE & VC investments nearly halved in first half of 2016
- Private equity investments in India, excluding real estate, rose to $5.8 billion, nearly 46 per cent less than $10.6 billion recorded during the same period last year. On a quarterly basis, deal value is down 62 per cent from $6.1 billion in second quarter of 2015 to $2.2 billion in the same quarter in 2016; the lowest investment received in the second quarter since 2013.
- Deal volume was recorded at 643 deals, down 13 per cent compared to 737 deals in the corresponding period last year. The year so far has seen a stark increase in angel investments, while institutional funding across venture and late stage has slowed down considerably.
- Venture and late stage capital declined significantly, down 64 per cent in first half of 2015 and 55 per cent, in first half of 2016, respectively. In terms of deal volume, the dip across the two stages was recorded at 33 per cent and 42 per cent, respectively.
- Angel and seed investments grew 16 per cent to 368 deals in H1 2016 from 317 deals a year-ago, while deal value slipped 25 per cent to $100 million from $134 million, suggesting a drop in average ticket-size.
Lower Exit Valuations
- Private equity exits down to a five-year low on a sequential basis. Private equity investors unlocked $1.4 billion worth of investments across 97 exits in H1 2016. Deal volume dipped 37 per cent and deal value dropped 63 per cent compared to the same period last year.
- M&A was the preferred mode of exit in H1 CY16 with 45 deals, followed by 28 Open Market deals.
A Mixed Bag for M&A Deals
- First-half of calendar year 2016 saw 479 M&A deals worth $14.5 billion, compared to H1 last year; deal value is up 76 per cent while deal volume remains unchanged.
- Domestic M&A deals saw an uptick in deal value and volume, growing 86 per cent and 10 per cent, respectively. Cross-border deal-making, however, slowed down between H1 of 2015 and 2016; inbound deals declined by 17 per cent and outbound deals slipped 3 per cent. In terms of deal value inbound deals dropped 14 per cent.