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PE inflow of US$ 21 billion surpasses the highs of 2007: VCCEdge

Business Standard:  January 01, 2016

Chennai: The full year of 2015 has seen the private equity (PE) inflow touching $21 billion, surpassing the previous high of $18 billion in 2007, according to the data released by VCCEdge, the financial research platform of the VCCircle Network. While deal values of mergers and acquisitions (M&As) have seen a decline, equity capital markets remained supportive, according to the data and analytical overview of the deals in the PE, M&A and public offering space in India during the year 2015.

Angels and VCs together contributed about 27.5% of the total private equity (PE) investments. Mumbai stood first in terms of attracting private investments and M&A activity while Bengaluru was the second best in terms of drawing deals. Bengaluru shared the second spot along with New Delhi in terms of attracting M&A in value terms.

"In a first, private equity inflow of $21 billion for the full year of 2015 surpassed the previous high of $18 billion seen in 2007. Compared to the $12.5 billion invested in 2014, the inflow in 2015 is up nearly 67%," said VCCEdge announcing its findings. The data excludes real estate and venture debt.

The total number of deals seen an all-time high with 1,375 deals recorded during 2015, which according to the research firm, is the highest in the history of Indian private equity. Compared to 934 deals in 2014, the deal volume went up 48 % in 2015. Big-ticket deals, which are at a size of $100 million and above constituted about 63 % of the total private equity capital invested in 2015.

The number of big ticket deals more than doubled to 53 with a total value of $13.2 billion, compared to 24 deals with a total value of $5.8 billion in 2014, up nearly 127%. Value of private exits increased 12.5 % to $5.4 billion during the year though there was a decline in the number of deals. The number of deals dropped to 253 deals compared with 270 deals in 2014.

Early-stage investment, where Angel and Venture Capital investments remained the prime drivers of capital inflow also saw an increase during the year. Angel and seed investments grew 64 %, to $327 million from $200 million in 2014. Deal volume went up 82.6 % to 650 deals from 356 deals in 2014, added the research firm.

Venture capital funding recorded "the highest ever jump to cross a new milestone in 2015," it said. During the year, 473 VC deals were registered, as against 307 deals recorded in 2014. Deal value also grew more than double, to $5.4 billion during the year, as compared with $2.3 billion in 2014.

Angels and VCs together contributed about 27.5 % of the total private equity investments, up from 20 % in 2014, the highest ever early stage contribution to the overall private investment.

During the year, M&A deal value declined 31.5 % to $22.9 billion in 2015, compared to $33.5 billion in 2014. While the aggregate deal value is less than the previous year, M&A deal volume in 2015 increased to 938 deals, as against 892 deals in 2014.

While the inbound and outbound deals experienced a growth, domestic M&A deal value fell 58.5 % to $8 billion. Inbound and outbound deal value grew 70 % to $7.8 billion, and 95 % to $5.1 billion, respectively, during the year.

The equity capital markets remained supportive, with 70 companies raising $2.3 billion in public offerings during 2015. This is 2.4 times higher from what was raised in 64 deals in 2014.

The top five sectors attracted investment during the year include Consumer Discretionary, Information Technology, Financials, Industrials and Utilities. Healthcare, Financials, Telecommunications, Information Technology and Materials were the Top 5 sectors for M&A activity by value during 2015.

Mumbai continues to attract more private investment drawing deals worth $5.5 billion over 289 deals. Bengaluru came in second as it drew investment worth $3.4 billion over 304 deals. On the M&A deals, Mumbai stood first with 180 deals worth $4.6 billion while New Delhi and Bengaluru secured the second spot in value terms with $733 million investment, over 112 and 104 deals respectively.

VCCEdge said that the findings are part of a more comprehensive Annual Deal Report with sector and region-wise analysis that will be released in early January 2016.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.