Investments down 6.3% in Jan across 43 deals

Private equity and venture capital investments in India was down by 6.3% to $1.2 billion (Rs 8,037 crore approx) in January across 43 transactions, compared to last

Private equity and venture capital investments in India was down by 6.3% to $1.2 billion (Rs 8,037 crore approx) in January across 43 transactions, compared to last year, according to EY.

In terms of volume too there was a 6.5% decline as compared to January 2016, mainly due to a decline in number of growth/expansion funding deals and high value deals, with more than half the deals being less than $10 million each.

However, a single large deal -- Canada Pension Plan Investment Board’s (CPPIB) acquisition of 48 per cent stake in GlobalLogic for $720 million from Apax, accounted for 60 per cent of the deal value in January 2017.

“January 2017 investment numbers were influenced greatly by the large deal involving GlobalLogic, which was also one of the largest exits in recent times, reassuring the LPs (limited partners) about the India story,” Mayank Rastogi, partner and leader for PE at EY, said.

Rastogi further said that the deal volumes were sustained on the back of steady early stage and VC activity which does not seem to have had any impact from demonetisation.

“The Union Budget presented on February 1 was also largely positive for the industry and especially so for the start-up companies,” Rastogi said adding there are however, a couple of provisions like the introduction of thin cap rules which may have an adverse impact on investments in the infrastructure and real estate sectors.

Except for technology, all other prominent sectors recorded a decline in both value and volume as compared to January 2016, as well as the month prior to that.

Real estate and financial services record lower deal numbers after being top contributors last year. Real estate recorded $22 million through one deal, while financial services recorded $23 million by way of four deals respectively.

Among other sectors, food and agriculture performed well with $78 million across seven deals -- the highest monthly performance in over two years -- while education was another sector to record good number of deals totalling six for the month, the EY report said.