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www.pwc.com/globalmoneytree www.pwc.in
PricewaterhouseCoopers India Pvt Ltd
MoneyTreeTM India Report Q4 2015
Technology Institute
This special report provides summary results of Q4 ’14, Q3 ’15 and Q4 ’15.
Data provided by Venture Intelligence
PwC MoneyTreeTM India Report – Q4 ’15 2
Table of contents
1. Overview 3 A big year for Indian private equity! 3
2 Analysis of PE investments 4 Total equity investments 4 Investments by industry 5 Investments by stage of development 7 Investments by region 8 Top 20 PE deals 9
3. Analysis of PE exits 10 Total PE exits 10 Exits by industry 11 Exits by type 12 Top five PE exits 13
4. Active PE firms 14 5. Sector focus: IT & ITeS sector 15
Technology sector analysis 15 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
PwC MoneyTreeTM India Report – Q4 ’15 3
1. Overview
A big year for Indian private equity!
The year 2015 was the best year ever for private equity (PE) investing in India, with record investments as well as exits. It saw investments worth 19.5 billion USD in 730 deals and exits worth 8.7 billion USD in 230 deals.
Around 40% of the total investments were contributed by the technology sector (IT & ITeS), with total investments in that sector amounting to 7.6 billion USD. The surge in the tech sector was largely due to the increased interest in e-commerce, which saw deals worth approximately 5.4 billion USD. Other sectors that contributed substantially to this investment surge are financial services (2.4 billion USD), healthcare (1.6 billion USD) and energy (1.5 billion USD).
Early-stage deals and growth capital continued to contribute significant deal volumes; however, a substantial amount of investments—9.2 billion USD across 143 deals—were late-stage growth/buyouts. This includes investments in some e-commerce businesses which have evolved sufficiently.
The year saw exits worth 8.7 billion USD, which was more than double the exits in the previous year (4 billion USD) and over 50% higher than 2010, which was the best exit year prior to 2015 (2010 saw 6.3 billion USD in exits). It must also be noted that almost a quarter of the exits came by way of secondary sales, which were mostly early/growth investments bought by late-stage investors.
The last quarter of the year witnessed investments of 3.94 billion USD in 159 deals. The major contributor here was again the technology sector, attracting 1.26 billion USD in 93 deals. Interestingly, e-commerce did not play a big part in the last quarter.
Considering the levels of PE activity in 2015, it may be natural to assume that the momentum will continue in 2016. However, e-commerce fundraising slowed down at the tail end of the year and this will test the depth of the market in 2016. While financial services, technology and healthcare continue to see sustained activity (which could lead them to even better their 2015 numbers), the same cannot be said for consumer, industrials and infrastructure.
The Indian government’s focus on making it easier for foreign investors to do business in India will help from a perception standpoint and needs to be backed by real reform. India’s macros are looking good, with the current account and fiscal deficit at acceptable levels, a relatively stable rupee, inflation at below 5% and, most importantly, a declining interest rate regime. This should encourage private investment as demand picks up.
All in all, 2015 was a good year for PE investing in India, and the momentum seems to be extending into 2016. An enabling regulatory regime and a facilitating business environment will help both the seekers and providers of capital and the government is keen to provide a platform. This will spur investments in India in a bigger way than 2015 and, hopefully, result in another record year for 2016.
Sanjeev KrishanLeader, Private Equity and Transaction ServicesPwC India
PwC MoneyTreeTM India Report – Q4 ’15 4
2. Analysis of PE investments
Total equity investments in PE-backed companies
The last quarter of 2015 provided a strong finish to the year, making it the best year for Indian private equity (PE) in history. The fourth quarter of 2015 saw investments worth 3.9 billion USD, a 40% drop as compared to the previous quarter and a 12% drop as compared to the year-ago period. Despite the drop, the stellar performance throughout the whole year helped 2015 to become the best year ever, with a total of 19.5 billion USD worth of PE inflow.
Q4 saw 159 deals, while Q3 ’15 witnessed 203 deals (6.6 billion USD). As compared to this, the last quarter of 2014 had 146 deals worth 4.5 billion USD.
The information technology & IT-enabled services (IT & ITeS) sector continued to be the biggest sector, though its performance was comparatively low compared to the previous quarter. IT & ITeS attracted 1.3 billion USD in 93 deals, which is down 52% compared to the year-ago period and down 67% compared to the previous quarter.
The banking, financial services & insurance (BFSI) sector attracted 910 million USD in 10 deals. But the media & entertainment sector was a surprise, attracting investments worth 414 million USD.
Late-stage investments have continued their outstanding performance with 1.7 billion USD, while growth stage deals attracted 1.2 billion USD.
Regionally, Mumbai attracted 1.9 billion USD, while Bangalore was a distant second with investments worth 733 million USD.
Total private equity investments
Quarters 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 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Number of deals
21 23 22 40 44 42 47 64 101 89 108 99 118 96 140 179 167 109 135 86 81 50 72 103 100 93 128 106 135 138 152 135 147 133 143 122 120 127 125 111 156 135 136 146 203 165 203 159
Data provided by Venture Intelligence
510
197248
923576
351729
855
1,384
2,164
1,790
2,006
2,578
2,128
4,577
5,403
3,825
2,729
2,581
1,196
755
814
865
1,7492,114 2,198
2,397
1,948
4,273
2,565
3,952
1,853
2,314
2,165
4,026
1,384 1,299
4,848
1,571
2,3482,456
3,172
2,882
4,465
3,266
5,710
6,601
3,941
0
1000
2000
3000
4000
5000
6000
7000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Value of deals (in US$ Mn)
Analysis of private equity investments
PwC MoneyTreeTM India Report – Q4 ’15 5
Investments by industry Q4 ’14, Q3 ’15 and Q4 ’15 The IT & ITeS sector continued its outstanding performance and retained its top spot as the favorite sector for PE players. The sector attracted 1.3 billion USD in 93 deals, a 67% drop as compared to the previous quarter and a 52% drop as compared to the year-ago period. In Q3 ’15, the sector attracted 3.8 billion USD, whereas in the year-ago period, it was 2.6 billion USD.
The major deals in the sector included an investment of 325 million USD in QuEST Global by Bain and GIC, Blackstone’s 170 million USD investment in IBS, and Apax Partners’ 133-million deal with Zensar Technologies.
BFSI attracted 910 million USD in 10 deals, which is almost three times higher than the previous quarter (311 million USD in 8 deals) and 60% higher than the year-ago period (570 million USD in 12 deals). A 295-million-USD investment in ICICI Prudential by Temasek and PremjiInvest, and Fairbridge’s 201-million-USD investment and GA’s 173-million-USD investment in India Infolinepowered the sector during Q4 ’15.
Media & entertainment surprised everyone with investments worth 414 million USD, one of the highest in recent years, across just five deals. It saw just 28 million USD in the previous quarter, while there were no investments in Q4 ’14. This was mainly boosted by 350-million-USD investment in
two deals by KKR (300 million USD in Emerald Media and a 50-million-USD investment in CA Media).
Shipping & logistics is another sector that surprised in this quarter with 403 million USD in investments, mainly aided by a 175-million-USD investment in Embassy Industrial Park by Warburg Pincus. The energy sector has attracted 324 million USD, while healthcare and manufacturing underperformed (166 million USD and 27 million USD, respectively).
Data provided by Venture Intelligence
2,635
392
570
69
108
117
27
95
58
395
3,769
550
500
311
358
311
192
164
315
40
28
64
1,263
324
1
910
27
166
130
103
90
39
414
475
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
IT & ITeS
Energy
Telecom
BFSI
Manufacturing
Healthcare & life sciences
Food & beverages
Agri-business
Engineering & construction
Fast-moving consumer goods (FMCG)
Media & entertainment
Others
(in US$ Mn)
Q4 2014
Q3 2015
Q4 2015
Note: Others include other services, hotels & resorts, sports & fitness, agribusiness and retail.
Analysis of private equity investments
PwC MoneyTreeTM India Report – Q4 ’15 6
Bharti Gupta Ramola
Leader, Financial Services Industry, PwC India
‘With the government’s and the Reserve Bank of India’s focus on banking for the unbanked, and possibilities created by technology and mobility, there is tremendous potential for products and services that can target specific segments and improve access to financial services across the board. The insurance sector has also seen considerable activity after the government allowed foreign companies to increase their stake to 49%. Investors are bullish on the Indian growth story and opportunities to provide services and products in this exciting market.’
Sandeep Ladda
Leader, Technology Industry, PwC India
‘The IT sector continued its strong performance and emerged as the leader both in terms of investment volume and value; however, the performance of the sector declined as compared to previous quarters. A majority of the deals were in the growth and late stages, and Bengaluru continued to lead the pack regionally. Traditional IT & ITeS segment companies like QuEST Global, IBS Software Services and Zensar Technologies dominated the quarter as opposed to the usual headliners, e-commerce and online services. The e-commerce and online services segments, which had been flush with cash since late 2014, saw selective investments flowing in lately and e-commerce companies themselves have started focussing on profitability by controlling costs and marketing spends. With several companies shutting shop and significant lay-offs across the industry, e-commerce and online companies have started functioning rationally as funding is expected to get tougher in 2016.’
Analysis of private equity investments
PwC MoneyTreeTM India Report – Q4 ’15 7
Investments by stage of development Q4 ’14, Q3 ’15 and Q4 ’15
In the last quarter of 2015 late-stage investments continued to outgrow other types of investment routes, aggregating 1.7 billion USD in 23 deals. Growth-stage deals attracted 1.2 billion USD in 34 deals. Interestingly, buyouts dropped to the fifth position, with investments worth only 173 million USD, below public market deals (494 million USD) and early-stage deals (299 million USD).
Investments by stage of development
Data provided by Venture Intelligence
173
494
1,737
1,238
299
85
1,714
371
13
2,391
1,620
408
146
309
6
2,961
912
132
0 500 1,000 1,500 2,000 2,500 3,000
Other
Buyout
PIPE
Pre-IPO
Late
Growth
Early
(in US$ Mn)
Q4 2015
Q3 2015
Q4 2014
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.
Analysis of private equity investments
PwC MoneyTreeTM India Report – Q4 ’15 8
Investments by region Q4 ’14, Q3 ’15 and Q4 ’15
Mumbai attracted the highest investment in terms of geography, with aggregated investments worth 1.9 billion USD in 46 deals. Bangalore slipped to the second spot by a big margin—733 million USD in 31 deals. NCR saw investments worth 462 million in 37 deals. Other cities such as Pune (222 million USD), Jalgaon (103 million USD) and Thiruvananthapuram (170 million USD) have also attracted substantial PE interest in this quarter.
Investments by region
Data provided by Venture Intelligence
686
79
72
462
1,909
733
829
154
482
1,253
1,993
1,829
650
588
294
1,075
937
922
0 500 1,000 1,500 2,000 2,500
Others
Chennai
Hyderabad
NCR
Mumbai
Bangalore
(in US$ Mn)
Q4 2014
Q3 2015
Q4 2015
Note: NCR includes Delhi, Gurgaon and Noida.
Analysis of private equity investments
PwC MoneyTreeTM India Report – Q4 ’15 9
Top 20 PE deals Q4 ’15
The top 20 deals comprised 72% of the total deal value in Q4 ’15. This quarter is notable for the absence of any deals above 400 million USD. The top five deals together accounted for just 35% of the total deal value. The average deal value for this quarter was 24.8 million USD.
Top 20 PE deals in Q4 2015
Company Industry Investors Amount (US$ Mn)
QuEST Global IT & ITeS Bain Capital, GIC 325
Emerald Group Media & entertainment KKR 300
ICICI Prudential Life BFSI Temasek, PremjiInvest 295
ReNew Wind Power Energy Global Environment Fund, Goldman Sachs, ADIA 265
India Infoline BFSI Fairbridge Capital 201
Embassy Industrial Parks Shipping & logistics Warburg Pincus 175
India Infoline Wealth BFSI General Atlantic 173
IBS Software Services IT & ITeS Blackstone 170
Zensar Technologies IT & ITeS Apax Partners 133
Grofers Shipping & logistics Sequoia Capital India, SoftBank, Tiger Global 120
Avendus Capital BFSI KKR 115
Varun Beverages International Food & beverages AION Capital 93
Ratnakar Bank BFSI CDC Group, ADB 77
Cloud Nine Healthcare & life sciences India Value Fund 61
Continental Warehousing Nhava Sheva Shipping & logistics IFC 60
Jain Farm Fresh Foods Agri-business Mandala Capital 60
Naaptol.com IT & ITeS Mitsui PE 52
Dewas-Bhopal Corridor Engg. & construction IDFC Alternatives 52
CA Media Media & entertainment KKR 50
Netmeds IT & ITeS OrbiMed 50
Data provided by Venture Intelligence
PwC MoneyTreeTM India Report – Q4 ’15 10
3. Analysis of PE exits
Total PE exits Along with investments, 2015 was a strong year for exits too. Over all four quarters, there was a record exit of 8.6 billion USD in 230 deals. This is an all-time record, surpassing the exits worth 6.3 billion USD in 2010.
The fourth quarter of the year saw exits worth 1.5 billion USD in 51 deals, a 12% drop from the previous quarter (1.8 billion USD in 51 deals), but recorded a 16% surge as compared to the year-ago period (1.3 billion USD in 54 deals).
IT & ITeS emerged as the top sector in terms of exit value, with investments worth 598 million USD in 13 deals. The manufacturing sector saw exits worth 257 million USD, while telecom, with a single deal worth 250 million USD, secured the third spot.
Once again, secondary sales picked up the top position as the preferred exit route, with 696 million USD in nine deals. Further, public market sales saw 22 deals worth 539 million USD.
Total PE exits
Quarters 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 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Number of deals
15 7 10 14 17 18 23 25 21 18 23 32 35 39 38 33 34 15 21 11 17 42 32 31 48 37 44 61 34 33 31 31 46 35 34 37 37 41 22 34 27 61 49 51 61 67 48 51
Data provided by Venture Intelligence
158246
273121
1,479
179
2,001
1,189
554
574607
948801
669
1,514
789948
308210 268
277
706 604370
9731,005
1,227
3,079
780
1,080
795431
1,324
403
1,4761,597
1,122
1,913
448
1,216
470
1,238
1,289 1,331
1,444
3,838
1,746
1,538
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000Value of deals (in US$ Mn)
2004 2006 2007 2008 2009 2010 2011 2012 2013 2014 202005
Analysis of PE exits
PwC MoneyTreeTM India Report – Q4 ’15 11
Exits by industry Q4 ’14, Q3 ’15 and Q4 ’15
The IT & ITeS sector has done substantially well in terms of exits, attracting exits worth 598 million USD across 13 deals. This is six times higher compared to the previous quarter (98 million USD across nine deals) and 34% higher compared with the year-ago period (448 million USD across 15 deals). Manufacturing has secured the second position with deals worth 257 million USD across nine deals, which is over five times higher than the previous quarter (48 million USD across six deals), but reported a 44% drop compared to the same quarter last year (459 million USD across nine deals).
With a single deal, telecom witnessed an exit worth 250 million USD. BFSI secured deals worth 178 million USD (five deals) while exits in healthcare were worth 169 million USD in eight deals.
Exits by industry
Data provided by Venture Intelligence
942
-
169
-
178
250
468
95
95
118
75
319
575
1,154
12
27
12
7
70
50
- 200 400 600 800 1,000 1,200 1,400
Others
Engineering &construction
Agri-business
Healthcare & life sciences
Energy
BFSI
Telecom
(in US$ Mn)
Q4 2015
Q3 2015
Q4 2014
Note: Others includes shipping & logistics, other services, retail, food & beverages and hotels & resorts.
Analysis of PE exits
PwC MoneyTreeTM India Report – Q4 ’15 12
Exits by type Q3 ’14, Q2 ’15 and Q3 ’15
The pick-up in secondary sales is a good sign for Indian PE investing. In this quarter, secondary sales were the preferred exit route for PEs with nine deals worth 696 million USD. Public market sales witnessed 22 deals worth 539 million USD. Strategic sales saw 19 deals worth 303 million USD and there was one buy-back deal in Q4 ’15.
Exits by type
Data provided by Venture Intelligence
303
696
539
0
509
657
467
113
103
282
727
125
0 200 400 600 800 1,000 1,200 1,400 1,600
Strategicsale
Secondarysale
Publicmarket sale
Buyback
(in US$ Mn)
Q4 2014
Q3 2015
Q4 2015
Analysis of PE exits
PwC MoneyTreeTM India Report – Q4 ’15 13
Top five PE exits Q4 ’15
The top five exits comprised 60% of the total exit value in Q4 ’15.
Top five PE exits in Q4 2015
Company Industry Investors Deal amount (US$ Mn)
QuEST Global IT & ITeS Warburg Pincus 250
Viom Networks Telecom IDFC PE, GIC, Oman Investment Fund, DB Zwirn, SBI-Macquarie
250
IBS Software Services IT & ITeS General Atlantic 170
Zensar Technologies IT & ITeS Electra Partners 133
Hero MotoCorp Manufacturing Bain Capital 116
Data provided by Venture Intelligence
PwC MoneyTreeTM India Report – Q4 ’15 14
4. Active PE firms
Based on the volume of deals, Sequoia Capital was the most active investor of this quarter, with 12 deals. Accel secured nine deals. Ratan Tata made four investments in this quarter.
The most active PE investors in Q4 ’15 are listed below.
Investors No. of deals* Investors No. of deals*
Sequoia Capital India 12 KKR 2
Accel India 9 Lightspeed Ventures 2
Ratan Tata 4 Micromax 2
Kalaari Capital 4 Nalanda Capital 2
SAIF 4 Nexus Venture Partners 2
Flipkart 3 Qualcomm Ventures 2
Paytm 3 Ru-Net Holdings 2
Trifecta Capital 3 Tiger Global 2
ChrysCapital 3 Bessemer 2
Fairbridge Capital 3 Kae Capital 2
I Squared Capital 3 M&S Partners 2
IDG Ventures India 3 Mandala Capital 2
IFC 3 Matrix Partners India 2
Apoletto 2 NEA 2
Beenos Partners 2 Parampara Capital 2
Flipkart 2 RoundGlass Partners 2
Foxconn 2 YourNest 2
Infosys Innovation Fund 2 YouWeCan Ventures 2
InnoVen Capital 2
Data provided by Venture Intelligence
* Number of deals includes both single and co-investments by PE firms. Cases where two ormore firms have invested in a single deal areaccounted for as one deal for each firm.
PwC MoneyTreeTM India Report – Q4 ’15 15
5. Sector focusTechnology sector analysis
The Indian IT & ITeS industry contribution is expected to touch 9.3% of the country’s GDP in FY 2016, having exhibited a consistent CAGR of 13.9% from FY 2009 to FY 2015.
E-commerce is driving the rapid growth of the domestic IT & ITeS industry,attracting unprecedented levels of global interest and funding. Along withmobile apps, e-commerce is expected to grow by more than 30% annually.Digital transformation is creating new imperatives for India’s growth, withmany companies adopting digital technologies (analytics, cloud, mobility,social media, Internet of Things (IoT)) into their business models. The Indiantechnology and services industry is expected to reach revenues of 350 billionUSD by 2025, with 80% of the technology expenditure driven by digitaltechnologies.
In 2015, sectors such as banking, insurance and telecom saw the stabilization of their business and opened up their technology spend over the year, thereby driving the growth of the Indian IT & ITeS industry. The government revealed some new technology-centric initiatives last year—namely Digital India and Start Up India—to accelerate India’s plunge into the connected digital world.
The Start Up India initiative, launched in January 2016, aims to boost entrepreneurship in India and provides a wide range of incentives to start-ups.* India ranks third in technology start-ups and fifth across all start-ups globally. Over the last few years, the start-up industry has witnessed huge growth in the country. Start-ups are the centers of innovation and India needs to address the critical needs of the country in areas like affordable healthcare, education and financial inclusion by supporting these start-ups and providing incentives.
Incentives include minimum compliance, self-certification, ease of registering a business, bankruptcy, tax exemptions, a three-year tax holiday on profits and discounts on registering intellectual property (IP). Apart from boosting the prospects of emerging companies, there is a lack of seed-stage risk financing in India and venture debt has been missing in the ecosystem, with Indian start-ups only using equity as a source of capital. Indian companies are over-reliant on foreign venture capital and the government needs to offset this imbalance. The industry is looking forward to the implementation of the new tax framework for start-ups and to seeing how regulations will be relaxed to help further smooth operations.
Internet-driven start-ups dominate the entrepreneurial ecosystem today, leading to disruptive solutions and business models. The government’s aim of making India a digital economy serves as a great opportunity for the industry to develop innovative technology solutions.
Sandeep LaddaTechnology LeaderPwC India
* Tech Start-ups in India: A Bright Future, Nasscom®, 2015.
Sector focus: IT & ITeS
PwC MoneyTreeTM India Report – Q4 ’15 16
Total PE investments
Technology continues to be the most attractive sector for investors, with investments worth 1.26 billion USD across 93 deals. This is a 67% decline compared to the previous quarter and a 52% decline compared to the year-ago period. In Q3 ’15, the sector attracted investments worth 3.8 billion USD and 2.6 billion USD during the same period in the previous year.
The major deals in this sector included an investment of 325 million USD in QuEST Global by Bain Capital and GIC, Blackstone’s 170 million USD investment in IBS, and Apax Partners’ 133 million deal with Zensar Technologies.
The overall average deal size has fallen to 13.6 million USD compared to 31.67 million USD in the previous quarter. In addition, the average deal size of early-stage deals dipped to 3.4 million USD in this quarter.
Value of PE investments in IT & ITeS sector
Quarters 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 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Number of deals
9 11 9 10 12 12 10 17 28 18 35 21 34 35 35 32 33 27 47 26 24 16 21 21 28 16 36 24 40 47 43 43 47 49 60 40 44 43 48 48 70 61 78 79 110 97 119 93
Data provided by Venture Intelligence
63 99 96
538
241
49 55 93 217
850
366
151
625 647
307 233
555
353 422
165 99 65
397
106
273
111 148
311
791
347
515 443
303 312
2,423
181 150
481
648
988 985
772
1,568
2,635
1,037
1,855
3,769
1,262
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000Value of deals (in US$ Mn)
2004 2006 2007 2008 2009 2010 2011 2012 2013 2014 20152005
Sector focus: IT & ITeS
PwC MoneyTreeTM India Report – Q4 ’15 17
A comparison between the quarter-on-quarter growth rates of the IT & ITeS PE investments against the total PE investments during the last decade shows that funding for this sector is higher than the total PE funding in most quarters. But this quarter was different as both total PE investment and tech investments witnessed a decline of 40% and 67%, respectively. Given the huge surge in investment in the previous quarter, this is not very surprising.
Value of PE investments in the IT & ITeS sector
Years 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Quarters 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 Q3 Q4 Q1 Q2 Q3 Q4
Data provided by Venture Intelligence
-200%
-100%
0%
100%
200%
300%
400%
500%
600%
700%
800%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47
IT & ITeS investment growth
Sector focus: IT & ITeS
PwC MoneyTreeTM India Report – Q4 ’15 18
Investments by stage of development Q4 ’14, Q3 ’15 and Q4 ’15
As with overall investments, late-stage investors continued their dominance in the IT & ITeS sector, with investments worth 577 million USD in five deals. This, however, represents a 64% drop from the previous quarter and a 70% drop compared to the year-ago period. The growth stage has seen investments worth 295 million USD in 15 deals, while early-stage investors bet on 71 investments worth 242 million USD.
IT & ITeS investments by stage of development
Data provided by Venture Intelligence
148
577
295
242
0
14
1,618
1,382
288
467
53
1,957
471
102
52
0 100 200 300 400 500 600 700 800 900 1,0001,1001,2001,3001,4001,5001,6001,7001,8001,9002,000
PIPE
Late
Growth
Early
Buyout
(in US$ Mn)
Q4 2014
Q3 2015
Q4 2015
Sector focus: IT & ITeS
PwC MoneyTreeTM India Report – Q4 ’15 19
Investments by region Q4 ’14, Q3 ’15 and Q4 ’15
Bengaluru retained its top spot as the favorite technology investment destination, attracting 24 deals worth 479 million USD. Mumbai ranked second with 188 million USD in 18 deals. Thiruvananthapuram attracted investments worth 170 million USD in a single deal.
IT & ITeS investments by region
Data provided by Venture Intelligence
394
4
51
147
188
479
469
61
919
1153
1141
171
464
872
331
797
0 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200
Others
Secunderabad
Chennai
NCR
Mumbai
Bangalore
(in US$ Mn)
Q4 2014
Q3 2015
Q4 2015
Sector focus: IT & ITeS
PwC MoneyTreeTM India Report – Q4 ’15 20
Investments by subsector Q3 ’14, Q2 ’15 and Q3 ’15
The online services subsector retained the top slot, with investments worth 364 million USD across 41 deals, followed by BPO services with 325 million USD across two deals. IT services attracted 303 million USD across two deals.
IT & ITeS investments by subsector
Data provided by Venture Intelligence
1,869
383
154
81
58
90
2,557
405
398
304
65
39
364
325
86
16
303
169
0 500 1,000 1,500 2,000 2,500 3,000
Online services
BPO
Mobile VAS
Enterprise software
IT Services
Others
(in US$ Mn)
Q4 2014
Q3 2015
Q4 2015
Sector focus: IT & ITeS
PwC MoneyTreeTM India Report – Q4 ’15 21
PE exits in the sector Q4 ’14, Q3 ’15 and Q4 ’15
The IT & ITeS sector witnessed a huge surge in exit value, six times higher compared to the previous quarter and 34% higher than the year-ago period. The sector saw exits worth 598 million USD across 13 deals. There were three secondary sales worth 553 million USD. In the subsectors, IT services saw two exits worth 303 million USD, while IT products witnessed a single deal worth 250 million USD.
Total IT & ITeS exits
Quarters 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 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Numberof deals
8 4 3 12 5 6 8 8 7 6 11 12 9 16 7 8 9 5 4 3 5 4 8 8 14 11 4 13 9 8 4 9 11 9 8 9 5 10 9 7 9 14 6 15 16 13 9 13
Data provided by Venture Intelligence
93176
2277
2629
6…
58
316379
81 105 78
261 287
56 1967
12 1…3225
162
48
393
225
156
1,719
340
612
154
96
129106
1,056
258 225
519
194
498
181
185
10
183
429
1,921
98
598
0
500
1,000
1,500
2,000 Value of deals (in US$ Mn)
2004 2006 2007 2008 2009 2010 2011 2012 2013 2014 20152005
PwC MoneyTreeTM India Report – Q4 ’15 22
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 5 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 to be in the growth stage:
Third or fourth round funding of institutional investments
First or second round of institutional investments in companies that are more than 5 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 in companies that are more than 5 years old and less than 10 years old, or subsidiaries or spin-outs from larger businesses
Fifth or sixth round of institutional investments
Late stage: This comprises the following:
Investment in companies that are a decade old Seventh or later round of
institutional investments
PIPEs: The following constitute 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 vehicles (SPV) or project-level investments.
Types of PE exits
Buy-back: This includes the purchase of PE or VC investors’ equity stakes by either the investee company or its founders or promoters.
Strategic sale: This includes the sale of PE or VC investors’ 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 PE or VC investors’ equity stakes by another PE or VC investors constitutes secondary sale.
Public market sale: This includes the sale of 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.
PwC MoneyTreeTM India Report – Q4 ’15
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.
©2016 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 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.
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Contacts
Sanjeev Krishan Leader, Private Equity and Transaction Services PwC India [email protected] Sandeep Ladda Leader, Technology PwC India [email protected]
This report was researched and written by the following:
Pradyumna Sahu Director, Technology PwC India [email protected]
Sibi Sathyan Knowledge Manager, Private Equity PwC India [email protected]
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.
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