Government initiatives like the Pradhan Mantri Awas Yojana and the Housing For All agenda have boosted the affordable housing segment with real estate attracting 25 per cent of the total private equity investments, says a report by the assurance, tax and advisory firm Grant Thornton.
The report notes that private equity investments saw 50 percent decline in value terms in May at USD 1,180 million amid fall in big-ticket deals and cautious investor approach. While 53 private equity deals worth USD 1,180 million were announced in May this year, while the year-ago month saw 68 transactions worth USD 2,363 million.
“With deals aggregating to USD 27 bn over sub-100 transactions (M&A and PE), May 2018 had the highest transaction value reported in a month till date. PE/VC deal volumes and value of transactions executed declined by 22 per cent and 50 per cent respectively as compared to transactions in May 2017. Slowdown in PE/VC deals may be attributed to the wait-and-watch approach by PE/VCs, cautious approach on ongoing transactions resulting in lengthening of the deal lifecycle or absence of large ticket transactions,” says Pankaj Chopda, Director, Grant Thornton India LLP.
“Start-ups, real estate, retail and consumer and banking and financial services were the deal-making sectors in terms of PE volume and value. Considering the impact that start-ups have on lifestyle and consumer experience, positive reforms in affordable housing impacting the prospects of the real estate sector, role of IT and ITES companies in supporting ecommerce and start-ups, and role of banking and financial sectors in enabling consumer spending, we expect these will be the sectors of choice for PE/VCs. Overall, PE/VC activity is anticipated to be lighter in the near future,” he says.
Compared to April 2018, May witnessed a declining trend in deal values (down 48 per cent) and deal volumes (down 34 per cent).
Canada Pension Plan Investment Board (CPPIB) and Allianz Capital Partners' 55 per cent stake acquisition in India infrastructure trust IndInfravit Trust for USD 280 million was the top PE deal.
Other top deals announced during May include GIC-Gamnat acquiring 6 per cent stake in Godrej Properties for USD 152 million and Camas Investments acquiring 5 per cent stake in AU Small Finance Bank Ltd for USD 147 million.
Sector-wise, May was dominated by investments in startups, which contributed to 60 per cent of total investment volumes, the report said.
The fintech segment attracted significant investor attention with nine deals, followed by the health tech and retail space with three investments each, it said.