Traders at the BFAM Partners Ltd. in Hong Kong, China (Photographer: Justin Chin/Bloomberg)

July PE Investments Slump as Big-Ticket Deals Vanish

Private equity deal momentum saw a significant downtrend in July with deals worth USD 768 million, registering a decline of 73 per cent over the same period a year ago, largely due to absence of big-ticket deals. According to assurance, tax and advisory firm Grant Thornton, there were 86 PE deals worth USD 768 million in July this year while in the corresponding period last year, there were 111 transactions worth USD 2,839 million.

“PE investments witnessed a downward trend both in terms of volumes (23 per cent year-on-year) and values (73 per cent yoy), marking the month’s lowest investment values in the last three years due to absence of big-ticket investments (only 3 investments above USD 50 million compared to 11 in July 2015),” the report said. The year-to-date tally also suffered with deals worth USD 6,851 million in January-July as against USD 9,801 million last year.

“PE activity seems to have declined substantially both in terms of value and volume,” Grant Thornton India Partner Prashant Mehra said, adding that of the total PE deal value in July, nearly 30 per cent came from start-ups, and the other major contributor was BFSI (banking, financial services and insurance). Going ahead, however, the deal momentum looks bullish.

“PEs will be visualised as an alternative means of financing consolidation for large and select corporates, thus resulting in the long-awaited big-ticket transactions in the PE space,” Mehra said.

In line with the previous trend, July was dominated by investments in startups, which contributed to 70 per cent of total volumes and nearly 30 per cent of values. Interestingly, more than 50 per cent of investment volumes were towards early-stage funding towards startups (below Series B). The startup sectors that saw significant investor interest in July were retail, travel, transport and logistics, financial technology and discovery platforms. Others like BSFI, e-commerce and agriculture pulled in large investments over USD 50 million during the month, the report added.