PE, VC deals fall 30% to USD 13.6 bn in Jan-Sept 2016: Report

Private equity and venture capital investment inflows into the country declined 30 percent in the first three quarters of 2016, driven by fewer deals in the consumer technology segment, a report said.

"Deal volume decreased by nearly 25 percent to 764 during the first three quarter of 2016 as against 1,032 in the same period in 2015, while deal value decreased at a steeper rate of 30 percent to USD 13.6 billion from USD 19.1 billion last year," Bain & Company said in its report.

It said consumer technology, BFSI and IT were the top investment sectors, accounting for nearly 55 percent of the total deal value.

Excluding consumer technology, which accounted for nearly 30 percent of investment value last year, deal activity in 2016 is similar to 2015.

"Year 2015 saw a spurt of big ticket consumer technology investments at nearly USD 6 billion (30 percent of total) driven by Flipkart, Paytm, Ola, Snapdeal attracting large deals of less than USD 500 million.

"However, 2016 has witnessed a slowdown in consumer technology at USD 3 billion (20 percent of total)," the report said.

Leaving consumer technology, average deal size has increased to USD 25.1 million in 2016 compared to USD 19.7 million in 2015.

It said at current run rate, 2016 will likely end with USD 16.3 billion in investment value as against USD 23 billion in 2015 and USD 15 billion in 2014.

In Q3, private equity and venture capital deal volume decreased by 24 percent to 287 in from 387 a year ago.

"Deal value decreased by 45 percent to USD 4.5 billion in Q3 2016 as against USD 8.2 billion in same quarter last year.

"BFSI turned out to be a key sector of interest as investments in the space increased from USD 0.6 billion in Q3 2015 to USD 1. 4 billion in same quarter of 2016," it said.

Consumer technology, despite a slowdown (USD 1 billion in Q3 2016 as against USD 2.6 billion in Q3 2015), still remains the second largest sector by value.

Average deal size also decreased to USD 15.6 million in Q3 from USD 21.6 million, driven primarily by lower incidence (and size) of large deals less than USD 100 million.

The first three quarters saw robust exit activity with total exit value at USD 6.9 billion increasing by 30 percent over USD 5.4 billion in Q1-Q3 2015.

Key sectors for exits include manufacturing, healthcare and BFSI.

The third quarter has seen a spurt in exits with higher volume as well as value of exits, with a spike in strategic sales across sectors such as telecom, healthcare and IT, the report said.