Private equity deals rise by 100% in volume in July

With more than 60% of total volume, IT and ITeS continues to be the preferred sector for PE/VC investments

July witnessed heightened activity in private equity (PE) deals, with deal volume seeing a growth of 100%, as compared with last July, according to Grant Thornton India’s deal tracker report.

July was also the best month so far this year in terms of deal value, with PE and venture capital (VC) funds investing $2.15 billion across 110 deals, the report said.

“With more than 60% of total volume, IT and ITeS (information technology and information technology-enabled services) continues to be the preferred sector for PE/VC investments. Sectors like telecom, real estate and manufacturing also witnessed big-ticket PE investments of over $100 million,” the report pointed out.

The biggest PE deal in July saw TA Associates and India Value Fund Advisors investing $500 million in Atria Convergence Technologies. Other big deals of the month include Warburg Pincus’s investment of $284 million in Piramal Realty and Investment AB Kinnevik and Rocket Internet’s $168 million funding of Jabong.com.

Merger and acquisition (M&A) deal values increased 17% over last year to $4.57 billion, despite a 10% fall in overall deal volumes, primarily due to big-ticket in-bound and out-bound deals, which drove average deal size in this segment.

“Energy and natural resources, banking and financial services and pharma attracted big ticket deals valued over $100 million. The energy and natural resources sector witnessed the Rosneft-Essar deal estimated at over $2.2 billion,” the report said.

The month saw the largest acquisition by an Indian pharmaceuticals company in the US—Lupin’s acquisition of Gavis Pharmaceuticals for $880 million.

Compared with June, deal activity in July saw an upward trend both in terms of volume and value, with 10 deals valued at over $100 million each.

“PE activity continues to show promising trends as the overall macro-level indicators continue to look positive, whereas domestic M&A activity has been slipping. Q2 is generally better for M&A and with inflation remaining under good control, government spending expected to increase, more rate cuts expected and earnings to be better than the first half, M&A will perhaps swell upwards,” said Prashant Mehra, partner at Grant Thornton India.

Initial public offerings will probably also witness an upward movement as companies raise both primary and balance sheet repair capital, he said.

This article appeared in Live Mint on 13th August, 2015.