The investment activity in the country bounced back in November dominated by funding raised by start-ups, accounting for 78% of total volume of deals recorded, according to Grant Thornton’s Deal Tracker report.
E-commerce with a 6% share and banking with a 5% were the next big contributors to the total number of deals recorded.
“The PE transaction value and volume this month increased over last month, indicating a rebound in deal activity. Though Private Equity deal volumes remained stable, deal values surged by over 3 times as compared to transactions activity during the same period last year,” Prashant Mehra, Partner at Grant Thornton India stated in the report.
The value of deals – M&A and PE – recorded over two-fold increase year-on-year, even though the volume of deals dipped by 5%, implying an increase in big-ticket deals during the month. In terms of deal value, banking and financial services sector dominated with a 59% share, followed by retail and real estate with a 27% share during the month.
Among some of the major startup investments in November included Singtel, Innov8, and Harmony Partners’ USD 25 million investment in big data-based analytics platform Qubole. Healthcare startup Portea also raised USD 26 million during the month.
Overall deal activity year-to-date witnessed a marginal increase of 9% in deal values recording deals worth USD 59 billion. Private Equity investments alone surged by 70% compared with year-to-date 2016 on the back of big-ticket deals.
The volume of deals, however, declined by 24% y-o-y amidst uncertainty in the deal environment on account of GST’s implementation issues and higher market valuations.
“Increase in the number of big-ticket deals inked both in M&A and PE transactions are an index of improving confidence amongst the deal makers and [it] also will act as an encouragement for deal volumes,” Mehra states.
The firm expects reforms in the pipeline in the run-up to the elections in various states and Government’s efforts to attract foreign capital in core sectors to further fuel and continue the November deal activity. Start-ups, banking and insurance, e-commerce, manufacturing, pharmaceuticals, healthcare and biotech will be the key sectors that are expected to attract significant deal activity.
“With the year to date transaction values touching around USD 60 billion which is already at 10% growth from last year and with still a month to go, we seem to be heading towards an exciting finish to 2017 deal activity,” Mehra says.