Private equity deals recorded a 75 per cent increase year-to-date: Grant Thornton

Private equity (PE) deals recorded a significant 75 per cent increase year-on-year in investment values in year-to-date (YTD) compared to the corresponding period in 2016 while volumes declined by 23 per cent. According to a Grant Thornton report, "Occurrence of some high value PE transactions combined with decline in deal volumes increased the average investment size."

Overall deal activity (M&A and PE) in YTD 17 demonstrated a robust 56 per cent increase in values, while volumes declined by 22 per cent. A significant increase in high-value transactions - which includes deals estimated at $ 100 million and above - with 55 such deals in M&A and PE, together contributed to around 85 per cent of total deal values in YTD 2017, adds the report.

E-commerce, real estate, banking and telecom sectors brought in large PE investments in 2017 contributing over 65 per cent of total values, while volumes continued to be dominated by the start-up sector contributing 60 per cent of volumes.

Source: Grant Thornton

In the month of August, PE investment values witnessed a robust 356 per cent increase -- two billion-dollar investments contributed almost 78 per cent of the total PE investment values, while volumes declined by 46 per cent compared to August 2016. As compared to July 2017, the PE deal activity in August 2017 demonstrated revived deal growth with 4.1 fold increase in the deal values driven by big ticket PE investments, while volumes declined by 20 per cent, highlighted the report.

The overall deal activity (M&A and PE) in August 2017 witnessed a strong two-fold increase in values primarily driven by big ticket transactions which drove average deal size to 62 million from 21 million in August 2016. While PE investment values drove growth in values, low PE volumes resulted in 29 per cent y-o-y decline in overall deal volumes.

According to Prashant Mehra, Partner at Grant Thornton India LLP, "$ 6 billion worth of deals (M&A and PE) were transacted across nearly 100 transactions in August. However, a couple of PE transactions alone accounted for around $ 4 billion, driving 66 per cent of the overall deal values. With the exception of the above, deal value and volumes witnessed a decline of around 30 per cent as compared to the activity in Aug'16."

The month was dominated by investments in start-ups which contributed to 66 per cent of total investment volumes followed by real estate (7%) and banking (6%). On the other hand, e-commerce sector dominated the PE investment values contributing to 51 per cent of investment values.

"Increasing application of Insolvency and Bankruptcy code will bring more companies on the transaction tables to reduce the debt burden and also to get a share of good assets at a reasonable price. Similarly, nearing fund closure timelines and need for additional funding will encourage consolidations and secondary investments where PE will be looked at as a strong means of alternate financing," added Mehra.