MoneyTree India Report Q2 2014 - PwC · 2015. 6. 3. · PwC MoneyTreeTM India Report – Q2 ’14 4 2. Analysis of private equity investments Total equity investments in PE-backed

PricewaterhouseCoopers India Pvt Ltd

MoneyTreeTM India ReportQ2 2014Data provided by Venture Intelligence

Technology Institute

This special reportprovides summary results of Q2 ’13, Q1 ’14, and Q2 ’14.

www.pwc.com/globalmoneytreewww.pwc.in

2PwC MoneyTreeTM India Report – Q2 ’14

Contents

1. Overview 3

2. Analysis of private equity (PE) investments 4

Total equity investments in PE-backed companies 4

Investments by industry 5

Investments by stage of development 8

Investments by region 9

Top 20 PE deals 10

3. Analysis of PE exits 11

Total PE exits 11

Exits by industry 12

Exits by type 13

Top five PE exits 14

4. Active PE firms 15

5. Sector focus: IT & ITeS 16

Total PE investments 16

Investments by stage of development 18

Investments by region 19

Investments by subsector 20

PE exits in the sector 21

6. Definitions 22

Contacts 23

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1. Overview

Good days ahead?

After a long hiatus, the 2014 elections witnessed a clear verdict. People are looking for a government with a clear agenda of growth which is visible in the positive sentiment displayed by the stock markets. On one hand, the Sensex and Nifty are scaling new heights, companies are looking at raising money through public markets, and on the other hand, clarity on foreign direct investment (FDI) regulations and rolling out the goods and services tax (GST) regime are being discussed with renewed vigor. In the last quarter, investors chose a cautious, but optimistic approach as the period saw 2.8 billion USD worth of investment, marginally higher than the 2.6 billion USD of Q1 2014. However, investments in Q2 2014 were 40% lower as compared to the same period last year, which was an exceptional quarter and included the 1.2 billion USD investment by the Qatar Endowment Fund in Bharti Airtel. In Q2 2014, the financial sector surged to a new high, thanks to certain large investments in Kotak Mahindra and the Shriram Group. Healthcare and pharma also did well with Temasek and Warburg investing in Intas Pharma and Laurus Labs, respectively. The IT sector continued its strong performance, but there was a huge decline in sectors such as infrastructure and manufacturing. We believe that these sectors will perform better in the coming quarters as India is all set to attract a greater share of investments, with the expectation of a revival in the investment cycle. The 29 July 1 billion USD funding for Flipkart is just a beginning of this confidence. The deal pipelines of leading PE houses seem quite robust with a number of large corporate houses willing to let go of non-core assets and de-lever. Another area being watched closely is the exits of investments by PE houses to other PE houses. As long as valuations stay steady, we should see an increasing number of PE deals in the coming quarters.

Sanjeev KrishanPrivate Equity Industry LeaderPwC India


2. Analysis of private equity investments

Total equity investments in PE-backed companies

The investments in the second quarter of 2014 have continued their good

billion USD across 95 deals, a growth of 7% in value despite a 20% drop in volume. In the previous quarter, i.e., Q1 ’14, investments were worth 2.65 billion USD from 119 deals.

But compared against the same period last year, i.e., Q2 ’13, the value of deals has dropped by a whopping 41% and 23% by volume. In Q2 ’13, the value of investments were 4.83 billion USD from 124 deals.

Interestingly, with just eight deals,

insurance (BFSI) sector dominated this quarter in terms of value with 977 million USD worth of investments, more than a ten-fold jump compared to the previous quarter.

The information technology (IT) & IT-enabled services (ITeS) sector has emerged second in terms of invest-ment value with investments of 728 million USD and top in terms of volume with 42 deals.

While healthcare & life sciences, along with BFSI, has made a multi-fold increase in terms of value, other key sectors such as IT & ITeS,

manufacturing, energy and engi-neering & construction have decreased considerably compared to the previous quarter.

With regard to investments by stage of development, the late stage has received the highest value of invest-ments with 1.21 billion USD going into 30 deals, which is the highest by volume as well.

Geographically, Mumbai has emerged as the leader in terms of PE invest-ments (both by value and volume of deals) in this quarter with an invest-ment of 705 million USD from 22 deals.

576

357

845

2,038

1,776

2,768

1,9632,081

2,655 2,587

807711

1,010

2,370

2,044

1,582

3,829

1,1971,371727

5,401

4,378

3,815

2,097

Q119

Q223

Q321

Q438

QuarterNumber of deals

1,652

2,049

1,506

1,177

2,710

1,952

2,7042,211

3,864

1,229

4,834

2,186

2,646

Q144

Q242

Q346

Q462

Q1100

Q287

Q3106

Q499

Q1118

Q295

Q3139

Q4178

Q1165

Q2108

Q3136

Q487

Q173

Q248

Q369

Q4102

Q195

Q284

Q3122

Q4104

Q1121

Q2131

Q3145

Q4125

Q1132

Q2120

Q3131

Q4108

Q1107

Q2124

Q3111

Q494

Q1119

Q295

2,833

923

147242

464

0

1,000

2,000

3,000

4,000

5,000

6,000

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Value of deals (in USD Mn)

Figure 1: Total equity investments

Data provided by Venture Intelligence.

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Investments by industry Q2 ’13, Q1 ’14 and Q2 ’14

The BFSI sector attracted the highest investment during the second quarter of 2014, totalling 977 million USD in just eight deals, a value increase of more than tenfold from the previous quarter and a 14% surge from the same period last year. During the first quarter of the year, the sector saw 92 million USD in 11 deals, while it was 857 million USD in the same period last year.

The IT & ITeS sector has been pushed to the second slot with investments worth 728 million USD in 42 deals this quarter, a 22% decline as compared to the previous quarter in value, but a 52% rise from Q2 ’13. In the previous quarter, the sector attracted 939 million USD in 49 deals, while during the second quarter of last year, it saw 480 million USD in 42 deals.

The healthcare & life sciences sector has once again captured the eyeballs (and wallets) of investors, with investments totalling 576 million USD in 11 deals, an increase of more than sixfold from the previous quarter’s 93 million USD from the same number of deals. In Q2 ’13, the investments in this sector were 270 million USD from 19 deals.

Energy, manufacturing and engi-neering & construction are the three major sectors that recorded a consid-erbale decline in terms of deal value. The energy sector saw 54 million USD in three deals compared to the 414 million USD it received in six deals in the previous quarter, an 87% decline in terms of value. Comparing it with Q2 ’13, it recorded an 89% decline against 476 million USD investments in six deals during that period.

“The regulatory regime and changes as far as they concern the financial services area have been largely positive and encouraging. Thus, the sector is looking forward to continued and significant growth. Quite naturally with positive long-term prospects for large as well as niche participants, investors have been taking a keen interest in exploring opportunities. To a varying degree, almost all segments of the FS sector need capital for continued growth. It is therefore good that the investor universe is taking interest.”

Manoj Kashyap Financial Services Industry Leader PwC India


“The average ticket size of deals in the healthcare sector in Q2 ’14 was 52.36 million USD which is a quantum jump over the average ticket size of 8.45 million USD in the previous quarter and 14.21 million USD in Q2 ’13. This is representative of the increased appetite of the sector to absorb larger investments. Increased deal activity in the secondary transactions segment was the main contributor to the jump in volumes thus providing good exit opportunities to existing investors.”

Dr. Rana Mehta Healthcare Industry LeaderPwC India

“On the back of a strong and stable government whose one-point agenda is growth, we have witnessed yet another strong quarter of PE investments in the IT & ITeS sector. The online services subsector within IT & ITeS continues to attract the highest level of investment, as this subsector witnesses significant growth opportunities and burgeoning competition. Bengaluru, as a destination, continues to attract large PE investments and the NCR continues to climb the ladder in this space. A significant part of the entire investment in this quarter was in growth-stage deals.”

Sandeep LaddaTechnology Industry Leader PwC India

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Figure 2: Investments by industry

The manufacturing sector has witnessed investments worth 59 million USD this quarter in seven deals, a 52% decline in terms of value against Q1 ’14 and a 93% decline against the same period last year. In Q1 ’14, the total deal value was 123 million USD in eight deals, while it was 837 million USD in 11 deals in Q2 ’13.

Among the three, engineering & construction has nosedived with just 1 million USD in investment this quarter compared to 348 million USD investment in four deals in the previous quarter and a 184 million USD investment from two deals in the same period last year.

Note: ‘Others’ include other services, travel & transport, media & entertainment, hotels & resorts, education, fast-moving consumer goods, sports & fitness, agri-business, food & beverages and retail.

Energy

Healthcare & life sciences

Textiles & garments

Information technology (IT)& IT-enabled services

Manufacturing

Others

Engineering& construction

Shipping & logistics

Banking, financial services& insurance

1,5001,000 2,0005000

Q2 2013Q1 2014Q2 2014

$39

$0

$25$97

$0

$59$123

$1

$9$1

$38

$9$51$49

$348$184

$82

$1

$977

$837

$281$358

$1,640

$125

$0

$92$857

$576$93

$270

$54$414

$476

$728$939

$480

Travel & logistics

Education

Fast moving consumergoods (FMCG)




Investments by stage of development Q2 ’13, Q1 ’14 and Q2 ’14

In Q2 ’14, PE investments in the late stage have outshined both the growth stage as well as private investment in public equity (PIPE) investments with 1.21 billion USD investments in 30 deals, more than double of what it received in the previous quarter and a 21% increase from the investment value of the same period last year. In Q1 ’14 late-stage investment stood at 539 million USD in 14 deals, while in Q2 ’13, it was 1.00 billion USD in 24 deals.

Growth deals, with an investment of 877 million USD from 28 deals, ranks second in terms of value. The value of investments has declined marginally from 908 million USD with a 24% drop in terms of volume in this quarter as compared to Q1 ’14. When compared to Q2 ’13, the value of investments has shown marginal growth with five additional deals in this quarter.

PIPE deals have shown over twofold growth in this quarter vis-à-vis the prior quarter in value, from 255 million to 627 million USD from 11 deals as compared to the prior quar-ter’s 21 deals. When compared against Q2 ’13, it’s a 71% drop in value (from

2.15 billion to 627 million USD) and a 52% drop in volume (from 23 to 11 deals).

The early-stage category had 21 deals worth 98 million USD. While it’s a 13% decline in terms of value from the previous quarter (113 million USD from 41 deals), when compared to the same period last year, this is a 20% increase (82 million USD in 39 deals).

Buyout deals, with an investment of just 17 million USD from three deals, dropped 98% compared to both the previous quarter (722 million USD from five deals) as well as Q2 ’13 (751 million USD from three deals).

Note: Definitions for the stage of development categories can be found in the ‘definitions’ section of this report. Growth stage in the above graph includes both growth and growth-PE stages.

PIPE

Late

Other

Pre-IPO

Buyout

1,5001,000 2,0005000

Q2 2013

Q1 2014

Q2 2014

$751

$17

$722

$840

$1,210

$539

$2,150

$877

$908

$627

$98

$113

$82

$0

$10

$3

$1,001

$109

$0

$0

$255

Growth

Early

2,500


Figure 3: Investments by stage of development


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Ahmedabad

Bangalore

Pune

Hyderabad

Mumbai

1,5001,000 2,0005000

Q2 2013Q1 2014Q2 2014

1,771

705957

1,630

330515

156

491673

181

54796

356

88290

172

224

261364

380

24

NCR

Chennai

Others

273243


Investments by region Q2 ’13, Q1 ’14 and Q2 ’14

Mumbai has retained its top slot among regions in terms of attracting PE investments, despite a 26% and 60% drop in terms of value as compared to the last quarter and the same period last year, respectively. The city hosted funding of 705 million USD in 22 deals compared to 957 million USD in 30 deals in the previous quarter and 1.77 billion USD in 31 deals in Q2 ’13.

Chennai has emerged as the second best investment destination with with 547 million USD from just eight deals, a growth of more than fivefold from the previous quarter (96 million USD in 10 deals) and a 54% increase from Q2 ’13 (356 million USD from seven deals).

The National Capital Region (NCR) has slipped to third position, recording 491 million USD funding in 21 deals, a drop of 27% in value. In terms of volume, NCR stands second after Mumbai. As compared to Q2 ’13, investments have declined 70%, from 1.63 billion USD in 22 deals.

While Bangalore has witnessed a 36% decline this quarter, the PE funding in Ahmedabad has surged sevenfold in value, from 24 million USD in one deal to 184 million USD in three deals. Hyderabad also has recorded a 94% surge from 88 million USD (five deals) to 172 million USD (three deals).

Smaller cities have also recorded a spurt in PE investment. They include Kochi (66 million USD), Kolhapur (55 million USD) and Tiruchi (50 million USD) in this quarter.

Note: The National Capital Region (NCR) includes Delhi, Gurgaon and Noida.

Figure 4: Investments by region



Top 20 PE deals Q2 ’14

Company Industry InvestorsDeal amount (in USD Mn)

Kotak Mahindra Bank BFSI CPPIB 372

Shriram Capital BFSI Piramal Enterprises 334

Flipkart IT & ITeS Tiger Global, Iconiq Capital, DST Global, Others

210

Intas Pharmaceuticals Healthcare & life sciences Temasek 170

Laurus Labs Healthcare & life sciences Warburg Pincus 150

Shriram City Union Finance BFSI Piramal Enterprises 131

Snapdeal.com IT & ITeS Temasek, Premjinvest, Others 100

Varun Beverages International Food & beverages IFC 85

Aster DM Healthcare Healthcare & life sciences India Value Fund, Olympus Capital

66

Jubilant Pharma Healthcare & life sciences IFC 60

Ratnakar Bank BFSI IFC, Gaja Capital, CDC Group, Asia Capital and Advisors

55

Vasan Eye Care Healthcare & life sciences Sequoia Capital India, GIC, WestBridge

50

Sula Vineyards Food & beverages Reliance Capital, Verlinvest, VisVires Capital

46

KIMS Hospital Healthcare & life sciences ICICI Venture 36

Lemon Tree Hotels Hotels & resorts APG 32

Freshdesk IT & ITeS Tiger Global, Accel India, Google Capital

31

Lucid Colloids Agri-business IFC 30

iYogi IT & ITeS Sequoia Capital India, DFJ, Saama Capital, SAP Ventures, Madison India, Axon Partners

28

Vistaar Finance BFSI Saama Capital, Omidyar Network, Elevar Equity, WestBridge

27

IndiaHomes Other services NEA, Helion Ventures, Foundation Capital

25

Table 1: Top 20 PE deals

The top 20 deals comprised 72% of the total deal value in Q2 ’14. The top three deals constituted 45% of the

total top 20 deal value. About 87% of the deals in this quarter are below the value of 50 million USD.


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3. Analysis of PE exits

Total PE exits

The exit activity in the second quarter of 2014 has achieved an improvement of more than threefold in terms of value and twofold in terms of volume. Total exits were worth 1.06 billion USD in this quarter in 37 deals while in Q1 ’14, PE exits were worth 300 million USD from 18 deals.

When compared to the same period last year, exits have shown a decline of 45% and 12% in value and volume

respectively. In Q2 ’13, there were 42 exits worth 1.94 billion USD.

The majority of the exits in this quarter came from the healthcare & life sciences and manufacturing sectors which together contributed almost 80% to the total exit value and 27% to the total volume.

In this quarter, almost 50% of the exits by value have been through public market sale (519 million USD from 25 deals). Exits through strategic sale reported the next highest share, with 334 million USD from nine deals.

Q112

Q26

Q38

Q412


0

Q116

Q213

Q322

Q425

Q114

Q217

Q320

Q427

Q134

Q239

Q339

Q435

Q130

Q216

Q315

Q411

Q119

Q245

Q334

Q432

Q147

Q232

Q346

Q455

Q133

Q227

Q333

Q427

Q145

Q235

Q332

Q438

Q137

Q242

Q325

Q431

Q118

Q237

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Total equity exits


500

1,000

1,500

2,000

2,500

3,000

3,500

1,029

172

1,008644

559

827854

612 683

1,323

834

280

202

592

279

599

936

927

1,212

787

449

1,905

235416 385

534

300

1,468

3,063

1,133

1,131

886

1,3201,506

1,615

1,941

1,064

68

167

238

257

116

Figure 5: Total private equity exits



Energy

Healthcare & life sciences

Textiles & garments

Information technology (IT)& IT-enabled services

Manufacturing

Others

Banking, financial services& insurance

150100 200500

Q2 2013Q1 2014Q2 2014

140

4

640

102

323

21

$1

50$9

46

435

0

540

126123

0

$576 37925

476

4240

26

250 300 350 400 450 500 550


Exits by industry Q2 ’13, Q1 ’14 and Q2 ’14

The healthcare sector topped the list of PE exits, in terms of value, with six deals worth 424 million USD. This constitutes 40% of the total deal exit value. There were no exits in the previous quarter in this sector, while during the same period last year, the total exit value was just 26 million USD in two deals.

The manufacturing sector stands second with a 93% increase in exit value, 379 million USD in four deals, as compared to 25 million USD worth of exits in three deals in the previous quarter. But comparing this with the same period last year, the total exit in the sector has shown a decline of 20%, compared to 476 million USD worth exit in six deals.

The energy, BFSI and IT & ITeS sectors have witnessed exits worth 64 million USD (four deals), 50 million USD (seven deals) and 21 million USD (five deals) respectively.

Note: Others include engineering & construction, shipping & logistics, textiles & garments, energy, other services, retail, food & beverages and hotels & resorts.

Figure 6: Exits by industry


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Exits by type Q2 ’13, Q1 ’14 and Q2 ’14

Public market sales have become the preferred mode of exit in the second quarter of the year in terms of both value and volume. In 22 deals, the public market has provided exits worth 519 million USD for PE players, a four-fold increase from the previous quarter (117 million USD in nine deals) and a 20% dip while comparing it with the same period last year (647 million USD in 22 deals).

Secondary sale

Buyback

Strategic sale

600400 8002000

Q2 2013Q1 2014Q2 2014

647

828

519

117

205

00

156

153

108

334

0

6

202

29

Public market sale

IPO

1,000


Public market sales and strategic sales together constituted 80% of the total exit value and 87% of the total volume in this quarter. Strategic sales have more than doubled in terms of value, at 334 million USD in nine deals as against 153 million USD in six deals in the previous quarter. It has grown threefold vis-à-vis the same period last year (108 million USD in seven deals).

Secondary sales have accounted for 205 million USD in exits from two deals, almost a sevenfold growth from the last quarter (29 million USD in

two deals), but declined by 75% as compared to the same period in 2013 (828 million USD in six deals).

This quarter did not witness any exits through IPO.

Note: N/A indicates this information has not been publicly disclosed. Note: Definitions of the types of exit can be found in the ‘definitions’ section of this report.

Figure 7: Exits by type



Top five PE exits Q2 ’14

The top five exits comprised 75% of the total exit value in Q2 ’14.

Company Industry InvestorsDeal amount (in USD Mn)

Hero MotoCorp Manufacturing Bain Capital 245

Intas Pharmaceuticals Healthcare & life sciences ChrysCapital 170

Laurus Labs Healthcare & life sciences Fidelity Growth Partners, Others 150

Mahindra & Mahindra Manufacturing Goldman Sachs 127

Medreich Healthcare & life sciences Temasek 96

Table 2: Top five private equity exits


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Investors No. of deals

IFC 8

Lightbox 7

Helion Ventures 6

Intel Capital 5

Tiger Global 5

Blume Ventures 4

Nexus Ventures 4

SAIF 4

Sequoia Capital India 4

Accel India 3

Ascent Capital 3

Capital18 3

ChrysCapital 3

Kalaari Capital 3

Norwest 3

WestBridge 3

Apax Partners 2

APG 2

BanyanTree Growth Capital 2

IDG Ventures India 2

Inventus Capital Partners 2

Jarvinia Holdings 2

Matrix Partners India 2

Motilal Oswal 2

Nokia Growth Partners 2

Piramal Enterprises 2

PremjiInvest 2

Qualcomm Ventures 2

Saama Capital 2

Seedfund 2

Temasek 2

Warburg Pincus 2

4. Active PE firms

Based on the volume of deals, IFC has emerged as the most active investor in Q2 ’14. The most active PE investors in the second quarter of 2014 include the following:

* Number of deals includes both single and co-investments by PE firms. In cases where two or more firms have invested in a single deal, it is accounted for as one deal for each of the firms.

Table 3: Most active PE investors in Q2 ’14



5. Sector focus: IT & ITeS sector

Total PE investments

The second quarter of the year has witnessed investments worth 728 million USD in 42 deals in the IT & ITeS sector. Though it is a 22% decline as compared to the previous quarter in value terms, it represents a 52% rise as against Q2 ’13. In the previous quarter, the sector has attracted 939 million USD in 49 deals while during the second quarter of last year, totals were 480 million USD in 42 deals.

The average deal size in this sector has shown a drop in this quarter, from 19.2 million USD in the prior quarter to 17.3 million USD in this quarter. In Q2 ’13, the average deal size in this sector was 11.4 million USD.

Unlike previous quarters, the IT & ITeS sector saw early-stage deals with better values. The average early-stage deal value for this quarter was 5.4 million USD as against the 1 million to 3 million USD deals during the last two years.

Q1 Q2 Q3 Q4Quarter

0

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Value of PE investments in IT & ITeS sector


500

1,000

1,500

2,000

2,500

3,000

24149

217360

181

625

308

647

354

447

166

389

62 106 107148311 344

266121

850

55 84229

559

341 294309

984

480657

515

2,407

146176

618 939728

62

99

95

538

318 10 8Number of deals

8 12 11 10 16 28 18 34 23 34 35 35 31 30 49 27 20 15 20 21 26 15 36 24 39 45 43 40 44 47 57 41 42 42 41 45 49 42

Table 3: Most active PE investors in Q2 ’14

Figure 8: Value of private equity investments in IT & ITeS sector


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In the last decade, a comparison between quarter-on-quarter growth rates of the IT & ITeS PE investments and total PE investments reflects that funding for the sector has outpaced the growth of total PE funding in most quarters. But in the last two quarters, including the present, IT & ITeS sector funding has been negative while overall funding has witnessed much higher growth.

700%

630%

560%

490%

420%

350%

280%

210%

140%

70%

0%

-70%

-140%

-210%

-280%

-350%

-420%

-490%

-560%

-630%

-700%

Total investment growth IT & ITeS investment growth

Figure 9: Value of private equity investments in IT & ITeS sector


Sector focus: IT & ITeS sector


Figure 10: Investments by stage of development

Investments by stage of development Q2 ’13, Q1 ’14 and Q2 ’14

The IT & ITeS sector, as usual, witnessed a large volume of deals, but with a better average value than recent quarters.

Unlike previous quarters, even the average early-stage funding value of this quarter looks better, with 76 million USD in 14 deals and an average deal size of 5.4 million USD. While compared to the previous quarter, the total deal value is slightly better (73 million USD in 26 deals) and it is a 31% surge from the same period last year (58 million USD in 29 deals).

Growth-stage deals saw highest investments in terms of value, 472 million USD from 15 deals in this quarter. This represents about 65% of the total investment in this sector. As compared to the preceding quarter, value has declined by 14% in this quarter, but showed an almost fivefold increase from the same period last year.

The sector also witnessed 10 late-stage deals worth 158 million USD, a threefold increase in value in this quarter as against the last quarter.

The sector witnessed only one pre-IPO stage deal worth 3 million USD in this quarter.

PIPE

Late

Pre-IPO

Buyout

300200 4001000

Q2 2013Q1 2014Q2 2014

6

3

260

114

158

59

472

19

0

23

7358

76

270

00

9

547Growth

Early

500 600




Note: Definitions for the stage of development categories can be found in the ‘definitions’ section of this report. Growth stage in the above graph includes both growth and growth-PE stages.

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Pune

Hyderabad

Chennai

Kochi

Bangalore

Mumbai

4003500

Q2 2013Q1 2014Q2 2014

48

117214

87

272358

282

239196

31

1753

23

2110

35

15

7117

15

26

NCR

Others

000

30025020015010050


Investments by region Q2 ’13, Q1 ’14 and Q2 ’14

Bangalore has retained its supremacy as the most popular IT investment destination in this quarter, with a total of 272 million USD from 11 deals, but a decline of 24% in value as compared to the preceding quarter. Against the same period last year, there has been an 18-fold growth in the value of investments in this region—from 15 million USD (seven deals) in Q2 ’13 to 272 million USD (11 deals) in this quarter.

NCR ranks second with an investment of 239 million USD from 12 deals, an increase of about 22% in value and 35% in volume compared to the past quarter. In Q1 ’14, NCR investments stood at 196 million USD from nine deals.

Mumbai, with an investment of 117 million USD from eight deals, has shown a drop of 45% in value. However, when compared to Q2 ’13, the growth in value is almost three-fold, from 48 million to 117 million USD in this quarter.

Figure 11: Investments by region




Investments by subsector Q1 ’13, Q4 ’13 and Q1 ’14

The online services subsector has once again received the highest level of investment in the second quarter of the year as well, with 557 million USD from 21 deals. As against the preceding quarter, the value of deals has surged by about 30% (427 million USD in 22 deals).

The enterprise software subsector came in a distant second, receiving investments worth 52 million USD from seven deals, a decline of 63% in value and 50% in the number of deals. When compared to the same period last year, there has been a nearly twofold growth in value in this quarter.

None of the other subsectors received considerable invest-ment in this quarter, including IT services.

IT products

ITeS-BPO

Networking technology

Mobile services

Online services

300200 4001000

Q2 2013Q1 2014Q2 2014

122

557427

299

28265

3

2253

13

52139

25

392

29

25

117

4

15

IT services

Enterprise software

Others

00

10

500 600


Figure 12: Investments by subsector



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PE exits in the sector Q2 ’13, Q1 ’14 and Q2 ’14

Exit activity in the IT & ITeS sector is so meagre this quarter that the sector saw only five exits with just 21 million USD, a 79% drop from the previous quarter and a 96% drop from the same period last year. In Q1 ’14, there were six exits worth 102 million USD while Q2 ’13 saw exits worth 540 million USD in 13 deals.

The majority of IT & ITeS exits in terms of value and volume this quarter are through strategic sale, with a total exit value of 19 million USD from three deals.

The online services subsector witnessed two exits worth 19 million USD in this quarter.

Q16

Q24

Q33

Q410


0

Q15

Q25

Q38

Q49

Q16

Q24

Q311

Q412

Q18

Q220

Q38

Q47

Q15

Q25

Q33

Q43

Q16

Q25

Q310

Q48

Q111

Q25

Q33

Q411

Q17

Q27

Q34

Q46

Q111

Q27

Q36

Q48

Q16

Q211

Q39

Q46

Q16

Q25

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

93

176

22

72

2629

671

57

313377

103

76

244289

55

19

67

11

12

37

25

161

55

348

153113

1,717

323

577

16979

129

87

1,053

250 230275

540

408

Total private equity exits


500

1,000

1,500

2,000

10221

130

Figure 13: Total PE exits




6. Definitions

Stages of development

Early stage: This refers to the first or second round of institutional investments in companies that adhere to the following:

• Less than five years old

• Not part of a larger business group

• Investment is less than 20 million USD

Growth stage: This refers to investments of less than 20 million USD. Also, investments meeting the following criteria are considered in the growth stage:

• Third or fourth round funding of institutional investments

• First or second round of institutional investments for companies that are more than five years old and less than 10 years old or spin-outs from larger businesses

Growth stage-PE: This includes the following:

• First or second round of investments worth 20 million USD or more

• Third or fourth round funding for companies that are more than five years old and less than 10 years old or subsidiaries or spin-outs of larger businesses

• Fifth or sixth rounds of institutional investments

Late stage: This comprises the following:

• Investment in companies that are a decade old

• Seventh or later rounds of institutional investments

PIPEs: The following constitute as PIPEs:

• PE investments in publicly listed companies via preferential allotments or private placements

• Acquisition of shares by PE firms via the secondary market

Buyout: This is an acquisition of controlling stake via purchase of stakes of existing shareholders.

Buyout–large: This includes buyout deals of 100 million USD or more in value.

Other: This includes PE investments in special purpose vehicle (SPV) or project-level investments.

Types of PE exits

Buyback: This includes the purchase of the PE or VC inves-tors’ equity stakes by either the investee company or its founders or promoters.

Strategic sale: This includes the sale of the PE or VC inves-tors’ equity stakes (or the entire investee company itself) to a third-party company (which is typically a larger company in the same sector).

Secondary sale: Any purchase of the PE or VC investors’ equity stakes by another PE or VC investor constitutes secondary sale.

Public market sale: This includes the sale of the PE or VC investors’ equity stakes in a listed company through the public market.

Initial public offering (IPO): This includes the sale of PE or VC investors’ equity stake in an unlisted company through its first public offering of stock.

PwC23

www.pwc.com/globalmoneytreewww.pwc.in

Sandeep LaddaTechnology Industry LeaderPricewaterhouseCoopers India Pvt [email protected]

Sanjeev KrishanPrivate Equity Industry LeaderPricewaterhouseCoopers India Pvt [email protected]

This report was researched and written by the following:

Pradyumna SahuDirector, TechnologyPricewaterhouseCoopers India Pvt [email protected]

Sibi SathyanKnowledge Manager, Private Equity PricewaterhouseCoopers India Pvt [email protected]

Contacts

PricewaterhouseCoopers and Venture Intelligence have taken responsible steps to ensure that the information contained in the MoneyTreeTM report has been obtained from reliable sources. However, neither of the parties can warrant the ultimate validity of the data obtained. Results are updated periodically. Therefore, all data is subject to change at any time. Before making any decision or taking any action, you should consult a competent professional adviser.

© 2014 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see http://www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. MW-15-0135

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About PwC’s Technology Institute

The Technology Institute is PwC’s global research network that studies the business of technology and the technology of business with the purpose of creating thought leadership that offers both fact-based analysis and experience-based perspectives. Technology Institute insights and viewpoints originate from active collaboration between our professionals across the globe and their first-hand experiences working in and with the technology industry. For more information please contact Raman Chitkara, Global Technology Industry Leader at [email protected].

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PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.

Documents

MoneyTree India Report Q2 2014 - PwC · 2015. 6. 3. · PwC MoneyTreeTM India Report – Q2 ’14 4 2. Analysis of private equity investments Total equity investments in PE-backed