Private Equity investments cool off by 16% to $3.6 Billion in Q2’16

Sovereign Wealth & Buyout Funds Step Up Activity even as Mega Deals dry up for Internet & Mobile Cos

Private Equity firms invested about $3,602 million across 129 deals during the quarter ended June 2016, according to early data from Venture Intelligence, a research service focused on private company financials, transactions and their valuations. The investment amount was 16% lower than that invested in the same period last year ($4,278 million across 169 transactions) and 7% lower than the immediate previous quarter ($3,890 million across 169 transactions). The latest figures take the PE investments in the first six months of 2016 to $7,492 million across 298 transactions - comparable to the first six months of 2015 which had witnessed $7,340 million across 370 deals. (Note: These figures include Venture Capital investments, but exclude PE investments in Real Estate.)

Only six PE investments worth $100 million or more were reported during Q2’16 compared to 11 such transactions in the same period last year and 12 during the immediate previous quarter, the Venture Intelligence analysis showed. The largest PE investment announced during Q2’16 was Blackstone’s $1.1 billion buyout of the majority stake held by US-based Hewlett Packard Enterprise in IT Services & BPO firm MphasiS, which triggered an open offer to public shareholders of the target company. 

Sovereign Wealth Funds like Singapore’s GIC, Abu Dhabi's ADIA and Malaysia’s Khazanah participated in mega investments for companies like the renewable power focused Greenko Group (that raised $230 million from ADIA and GIC) and analytics BPO firm Fractal Analytics ($100 million from Khazanah). Canada-based Fairfax Group committed a $300 million to chemicals manufacturer Sanmar Group (close on the heels of its $321 million bet in Bangalore International Airport announced in March).

“Mega deals in the Internet & Mobile companies were noticeable by their absence in the latest quarter – even compared to the immediate previous quarter when companies like BigBasket, CarTrade and ShopClues had attracted investments of over $100 million each,” noted Arun Natarajan, Founder of Venture Intelligence. “Despite the cooling off in Internet & Mobile sectors as well as more recent international developments like Brexit, etc, the increasing commitments being made by truly long term investors like Sovereign Wealth Funds, Pension Funds and Buyout funds portends well for the second half of the year,” he added.

Led by the MphasiS and Fractal Analytics deals, IT & ITES companies accounted for 43% of the PE investment pie in Q2’16 attracting $1,564 million across 86 transactions. However, despite the blockbuster MphasiS transaction, the value of IT & ITES investments in Q2’16 was down 17% from the $1,889 million across 101 deals in the same period in 2015 (which had witnessed massive investments in Internet & Mobile companies led by Ola, Snapdeal and Quikr).

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Venture Intelligence, a division of TSJ Media Pvt. Ltd., is the leading source of information on private company financials, transactions and their valuations in India. For more information, please visit http://www.ventureintelligence.com