PE deals up by 27% in Q1 2016

Private equity (PE) transactions in the first quarter of 2016 witnessed a strong boost, both in terms of value and volume, on the back of seven big-ticket deals valued above $100 million. These large-ticket deals contributed to over 68 percent of the total deal value in the quarter.  

During the quarter, there were 280 PE deals worth $2,959 million, compared with 221 deals worth $2,599 million during the same period a year ago. This means the deal volume increased by 27 percent, while value went up by 14 percent, according to a report by Grant Thornton India. Prashant Mehra, partner at Grant Thornton India LLP, says the increasing number of big-ticket transactions is an encouraging trend. “Easing FDI norms, regulations in cross border transactions apart from implementation of other key government initiatives will hopefully continue to drive business sentiment and maintain this deal momentum throughout 2016.”

The investment activity was led by the ecommerce sector, contributing 33 percent of investment values and startups attracting 66 percent of investment volumes. The current quarter saw one of the biggest exits by KKR from an India-focussed investment – the US private equity giant sold its stake in Alliance Tire group to Japan's Yokohama Rubber for a deal consideration of $1.2 billion. Other key sectors which witnessed big-ticket investments (over $100 million each) this quarter were banking & financial services, pharma, health care & biotech and infrastructure.

When it comes to mergers and acquisitions (M&A), significant increase in domestic and outbound deal values led to a 31 percent year-on-year increase in overall M&A deal values. This quarter saw two deals valued at over a billion dollars and 10 deals valued at over $100 million each.