Private equity and venture capital investment in Jan decline to USD 1.8 bn: Report

In the absence of large deals, the overall private equity and venture capital (PE/VC) investments in January this year slipped to USD 1.8 billion, registering a decline of 49 per cent compared to last year, says a report. "The PE/VC investment activity in January 2019 recorded investments worth USD 1.8 billion across 89 deals and exits worth USD 360 million across 13 deals. The decline was mainly on account of the absence of a large USD 1 billion-plus deal in January 2019," according to a report released by consultancy firm EY.

Both in January 2018 and December 2018 PE/VC investments had one large USD 1 billion-plus deal each. EY noted that the decline was also despite a 65 per cent increase in the number of deals on a year on year basis.

January 2019 recorded four large deals (USD 100 million plus deals) aggregating USD 1.1 billion compared to five large deals worth USD 2.8 billion in January 2018 and six large deals worth USD 2.3 billion in December 2018. The largest deal in January 2019 was SoftBank's USD 397 million investment in First Cry, an e-commerce platform for kids and baby products. The other large deals in the month include Apax's USD 230 million investment in Fractal Analytics and AION's buyout of BPO firm Interglobe Technologies for USD 230 million.

From a sector point of view, e-commerce with USD 607 million across 11 deals in January 2019 compared to USD 17 million across two deals in January 2018, was the top sector followed by technology with USD 438 million across nine deals in January 2019 as compared to USD 86 million across 11 deals in January 2018. Start-up investments in January 2019, were at USD 343 million across 56 deals, were higher by 46 per cent in terms of value and over 50 per cent in terms of a number of deals compared to January 2018.

The report noted that four buyouts worth USD 504 million were recorded in January 2019, 20 per cent higher compared to January 2018. With fewer large exits, January also recorded a significant decline in exits at USD 360 million, compared to USD 969 million recorded in January 2018.

EY noted that the lower exit deal activity was mainly on account of fewer open market exits (5 deals in January 2019 vs 15 in January 2018). Also, there were no PE-backed IPOs in January 2019 compared to two in January 2018. The largest exit in January was TA Associates and Khazanah exiting their investments in Fractal Analytics via a secondary sale to Apax for USD 200 million.

EY pointed out that highest monthly fundraising of USD 2.5 billion. A USD 1.3 billion stressed asset fund raised by Edelweiss was the largest followed by ChrysCap's USD 850 million fundraise, its eight funds in India.

"In spite of the prevailing uncertainty and issues around general liquidity, we believe that 2019 should be a very good year for Indian PE/VC investments," EY partner and national leader-private equity services Vivek Soni said. Momentum in exits, largely on the back of secondary deals and strategic M&A, is projected to continue to be strong, Soni added.

(With inputs from agencies.)