Private equity investments jump by 64% in May 2017

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Private equity (PE) investors have reasons to cheer. Despite speculation that deal activity may slow down with fund managers taking a cautious approach towards fresh funding, value of private equity investments jumped a by a whopping 64 percent in May this fiscal compared to the corresponding month in 2016-2017.  
Investors pumped in $963 million last month, over $587 million in May 2016, according to a report released by Grant Thornton India, an assurance, tax and advisory firm. In 2015, however, which is considered the boom year for PE investments, as much as $1,248 million was infused by fund managers.

The reason for this significant jump in value last month is because of five big-ticket investments that alone were valued at over $50 million. In terms of PE numbers, in May 2017, as many as 67 deals were sealed compared to 74 in May 2016. In the same month in 2015, the transaction numbers were similar to this year: They stood at 68.

Even as a lot is being talked about an impending slowdown in the startup sector, the month of May, too, was dominated by investments in emerging businesses which contributed to 58 percent of total investment volumes. Sectors that were in focus were enterprise application, infrastructure, travel, transport and logistics and fintech.

In terms of total deal activity, mergers and acquisitions included, there was an 18 percent jump in value from May 2016. However, in terms of value, there were lesser number of transactions sealed (6 percent decline) in May 2017.
M&A values recorded a marginal increase of 4 percent over the same period last year. While the domestic deal activity recorded a nearly two-fold increase, the cross-border deal values fell by 49 percent due to reduced inbound investor interest, said Prashant Mehra, partner at Grant Thornton India.

Technology continued to evince interest among deal makers. Other contributing sectors were BFSI and pharma and health care.

“All eyes seem to be now on GST implementation and its impact on not only trade and economy, but more importantly on investor interest. Since there is now clear visibility on this, we should see good traction in both M&A and PE. Further, with India continuing to be a favoured destination among foreign investors, we should hopefully see more inbound action going forward,” says Mehra.