Value of PE deals down 47.3 per cent YoY: Report

India has in total seen 945 PE deals worth $8.8 billion in the past nine months ending September 2016, down 47.3 per cent YoY from $16.67 billion, as per a report 'India Quarterly Deals Q3' released by News Corp VCCEdge.

Q3 CY2016 witnessed 232 M&A deals to the tune of $24,673 million, an increase of 242 per cent, compared to $7,206 million raised from 254 deals in Q3 CY2015. While deal value picked up for domestic M&As from $1.5 billion to more than $20 billion, outbound deal value slipped by 58 per cent during the quarter.

The top three domestic M&A deals recorded in Q3 CY2016 were as follows:

• HDFC Standard Life's purchase of Max Life Insurance for $9,730 million in August 2016
• Reliance Communication-Aircel merger deal of $7,300 million in September 2016
• Nirma buying into the cement business of Lafarge India Pvt. Ltd. for $1,400 million in July 2016.

With $774 million across 67 deals, Delhi NCR has secured the highest investment in terms of deal value and number of deals during the quarter, says the report. This includes 43 deals in the IT space, 15 deals in consumer discretionary, and four deals in financial technology. Mumbai stood at second place with 37 deals amounting to $507 million. Bengaluru, Chennai and Pune also made it to the top five destinations.

Private Equity - Deal activity lowest since Q3 CY2013

Angel/ Seed investments - With 152 deals amounting to $49 million, angels and seed funds are seen shoring up deals activity during the quarter. This is against 245 deals worth $121 million registered in the corresponding quarter in CY2015. For the nine months ending September 2016, Angels have pumped in $179 million from 541 deals (as against 590 deals amounting to $273 million for the corresponding period in CY 2015).

Venture Capital investments - These saw a decline of 39 per cent in terms of number of deals and 58 per cent in terms of deal value for the nine months ending September 2016 having registered 267 deals worth $1,988 million. On a Q-o-Q basis, deal value fell from $1,878 million from 151 deals in Q3 CY2015 to $803 million from 69 deals in Q3 CY2016.

Private Equity Funds Investments - These witnessed a decline of 37 per cent in terms of number of deals and 50 per cent in terms of deal value for the nine months ending September 2016, having registered 99 deals worth $4,545 million. On a Q-o-Q basis, deal value fell from $3,446 million from 51 deals in Q3 CY2015 to $1,204 million from 29 deals in Q3 CY2016.

In Sum: Deal-making activity declined by 45 per cent to 258 deals as compared to 469 for the same period last year, and 11 per cent lower than the previous quarter. Private equity investments dipped significantly by 63 per cent to $2.3 billion in the Q3 CY16 as compared to $6.3 billion (a peak) a year ago and 3 per cent higher than the already dismal previous quarter. India has in total seen 945 deals worth $8.8 billion in the past nine months ending September 2016, as against 1,245 deals worth $16.7 billion in the corresponding time period last year.

Sectoral Analysis: A Secular decline in deal activity

Top sectors that attracted investor interest during the quarter include IT with 156 deals worth $603 million, consumer discretionary with 44 deals worth $456 million, Ffinancials with $642 million from 14 deals, and healthcare with $180 million from 17 deals.

In comparison to Q3 CY2015, the IT sector had garnered $2015 million from 258 deals, consumer discretionary - $2133 million from 97 deals, financials - $753 million from 24 deals and healthcare registering 27 deals worth $257 million.

In terms of exits, IT with 13 deals amounting to $1,077 million, healthcare with eight deals amounting to $612 million and financials with 11 deals worth $168 million were the top sectors.

Buoyant Equity Markets: QIPs make way for IPOs

IPOs increased by 182 per cent to $2.9 billion in value from January to September 2016 while QIPs lost flavour declining 91 per cent from $2.6 billion to $228 million this year.