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PricewaterhouseCoopers India Pvt Ltd
MoneyTreeTM India Report
Q2 2016
Data provided by Venture Intelligence
Technology Institute
This special report
provides summary results of
Q2 ’15, Q1 ’16, and Q2 ’16.
Table of contents
1. Overview
3
2. Analysis of PE investments
4
Investments by industry
5
Investments by stage of development
7
Investments by region
9
Top 20 PE deals
3. Analysis of PE exits
11
Exits by industry
12
Exits by type
13
Top five PE exits Q2 ’16
14
4. Active PE firms
15
5. Sector focus: IT & ITeS
16
Total PE investments
17
Investments by stage of development
19
Investments by region
20
Investments by subsector
21
PE exits in the sector
22
Definitions
PwC MoneyTreeTM India Report – Q2 ’16
10
23
2
1. Overview
Indian private equity did reasonably well in the second quarter of 2016, with overall investments worth 4.3 billion USD across 147 deals. Despite ecommerce/consumer Internet investments slowing down considerably owing to valuation and profitability concerns, the IT & ITeS sector continued its
dominance over other sectors with investments of 1.6 billion USD, primarily driven by the 1.1-billion-USD buyout of Mphasis by Blackstone. This decent
showing is despite the absence of a number of hedge funds that had joined the e-commerce bandwagon last year.
Financial services continues to be a favoured sector among growth/late-stage growth investors, and this mirrors the expected growth in the economy. Nonbanking financial companies, microfinance and fintech are subsectors which continue to see significant interest. Logistics and consumer are two other sectors
which could contribute to investment growth in the next half of the year with a combination of primary and secondary investments—in particular, the Goods
and Services Tax Bill (GST) has the potential to spur logistics deals.
At 1.2 billion USD across 40 deals, exits for the quarter saw a 54% drop as compared to the previous quarter. But, interestingly, this quarter saw four PE-backed
IPOs, and, as the markets continue to climb, more of these can be expected.
Buoyant stock markets are a challenge as well, as many promoters look at IPOs as opposed to raising private money in such situations. The outlook for the rest
of the year remains positive as India remains firm on its growth agenda. We see a number of pension and sovereign wealth funds setting up Indian offices and
starting to invest directly in the country—some of these are focussing on extracting good businesses from the stressed balance sheets of Indian corporates for
investment. Traditional private equity funds remain committed to investing in India across varying capital pools, and this complements the needs of Indian
businesses at a time when banks have become cautious about corporate lending.
A number of new sectors have been opened up for foreign investments, and are expected to draw corporate buyer interest as well, which is essential from an exit
standpoint for private equity investors. In addition, there is the potential additional spend that could be caused by the 7th Pay Commission implementation and
a good monsoon season, both of which are expected to bolster the economy further. While some of these factors may be short-term stimulants, they play an
important role, and with the reforms process looking reasonably irreversible and India firmly on the path of fiscal consolidation, private equity investors are
expected to continue to remain busy in the coming quarters.
Sanjeev Krishan
Leader, Private Equity and Transaction Services
PwC India
PwC MoneyTreeTM India Report – Q2 ’16
3
2. Analysis of PE investments
PwC MoneyTreeTM India Report – Q2 ’16
Total private equity investments
7000
5,993
6000
5000
5,403
4,848
4,577
4,465
4,273
3,952
4000
6,601
Value of deals (in US$ Mn)
4,188
4,026
4,277
3,781
3,825
3,172
3000
2000
1000
2,578
2,397
2,581
2,729
2,314
2,164
2,198
2,565
2,006
2,114
2,165
2,128
1,948
1,853
1,790
1,749
1,384
1,196
814
1,384 1,299
865
755
2,456
3,158
2,882
2,348
1,571
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
0
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
211
186
203
184
186
147
The second quarter of 2016 has again given a strong
push to Indian private equity (PE). Q2 ’16 has seen
investments worth 4.3 billion USD in 147 deals, a
2% increase in value terms as compared to the
previous quarter, despite deal volume decreasing by
21%. In Q1 ’16, investments worth 4.2 billion USD
were made in 186 deals. As compared to Q2 ’15, the
value of deals in this quarter has dropped by 29%
and volume has declined by 21%. In Q2 ’15, PE
investments stood at 6.0 billion USD in 186 deals.
The average deal size for this quarter was 29.1
million USD.
The information technology & IT-enabled services
(IT & ITeS) sector continued its dominance in this
quarter, despite a weak show by e-commerce
investments. While the investment flow of 1.6
billion USD in 92 deals was 17% higher than Q1 of
the year in value terms, there was an 11% drop in
terms of volume. However, the value reflects a 14%
drop as compared to the year-ago period.
The banking, financial services & insurance sector
(BFSI) again secured the second position, attracting
769 million USD—a 25% decline as compared to the
previous quarter and a 14% surge as compared with
the year-ago period. With just two deals, the energy
sector attracted 730 million USD.
This quarter has seen six buyouts worth 1.6 billion
USD, and the PE appetite continued to be strong,
with late-stage investments worth 1.2 billion USD
in 25 deals. The drought in early-stage investments
continued in this quarter, with just 183 million USD in 74 deals.
Regionally, Bengaluru attracted a little more than 1.5 billion USD, while Mumbai saw investments of just
1.5 billion USD. Contributions from other regions were insignificant in this quarter.
No. of
deals
Total equity investments in PEbacked companies
Data provided by Venture Intelligence
4
Analysis of private equity investments
Investments by industry
Q2 ’15, Q1 ’16 and Q2 ’16
The dominance of the IT & ITeS sector continued in
the second quarter of the year, despite a weakness
in e-commerce related deals. The sector attracted
1.6 billion USD in 92 deals, which is 17% higher
than the 1.4 billion USD in 103 deals it attracted in
the previous quarter, but 14% lower than the 1.9
billion USD in 106 deals it received
in Q2 ’15.
“The IT&ITeS sector continued to receive the highest level of funding among
all sector this quarter. Deal making displayed an expected dip after the
frenzy of deals in late 2015 and, measured against the second quarter of last
year, both values and volumes dropped. Investments in the e-commerce
segment have also declined and there is a slowdown in the investment
scenario across the start-up ecosystem. Going forward, while some investors
may have a reduced appetite, newer investors will continue to invest in this
segment for brighter ideas and teams. With consolidation starting to happen
in the e-commerce segment and ongoing corrections around valuations, the
focus on profitability will intensify in the coming quarters.”
Sandeep Ladda
Leader, Technology
PwC India
“As compared to the same period of last year, the
investment in BFSI has grown in the second quarter of
2016, but given the activity in the market, we were
expecting more deals to close. So, it would seem that
macroeconomic and political factors, including Brexit, the
US elections and slow growth in major economies, are
impacting the overall deals market. Since the financial
sector is one of the first sectors to be impacted by the
external environment, slower deal closing is reflective of
market sentiments.”
Bharti Gupta Ramola
Leader, Financial Services
PwC India
PwC MoneyTreeTM India Report – Q2 ’16
“Power generation platforms—both
conventional and renewable—are attracting
considerable interest from long-term investors
and funds. A common theme is to deploy these
platforms for takeover of partly developed and
distressed assets, with a strong technical
partner in tow to improve the commercial
viability of these projects.”
Kameswara Rao
Leader, Energy
PwC India
5
Analysis of private equity investments
The manufacturing sector also witnessed a good
deal flow in this quarter, with nine deals worth 544
million USD compared to the 178 million USD in
the previous quarter and 355 million USD in five
deals in Q2’15.
Investments by industry
Information technology
(IT) & IT-enabled services (ITeS)
1,396
Energy
230
Telecom
10
730
83
677
BFSI
1,029
769
Manufacturing
178
355
544
Healthcare & life sciences
816
454
233
32
25
Food & beverages
1,899
1,631
1,565
Q2 2015
Q1 2016
137
81
25
22
2
119
19
Agri-business
Engineering & construction
Q2 2016
Fast-moving consumer
goods (FMCG)
Media & entertainment
1
65
21
418
Others
701
193
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Data provided by Venture Intelligence
Note: Others include other services, hotels &
resorts, sports & fitness, agribusiness and retail.
PwC MoneyTreeTM India Report – Q2 ’16
6
Analysis of private equity investments
Investments by stage of development
Q2 ’15, Q1 ’16 and Q2 ’16
Buyouts led the PE investment inflow in the second
quarter of the year with 1.6 billion USD in six deals,
followed by late-stage investors with 1.2 billion
USD in 25 deals. The growth stage attracted 793
million USD in 31 deals, whereas PIPE deals saw
527 million investment in 11 deals. Early-stage
investments sank further to 183 million
USD in 74 deals.
Investments by stage development
356
Early
230
183
1,125
1,089
Growth
793
1,251
Late
1,544
1172
Q2 2015
Pre-IPO
Q1 2016
Q2 2016
963
PIPE
338
527
2,248
Buyout
946
1603
50
40
Other
Note: Definitions for the stage of development
categories can be found in the ‘definitions’
section of this report.
0
500
1,000
1,500
2,000
2,500
Data provided by Venture Intelligence
Growth stage in the above graph includes both
growth and growth-PE stages.
PwC MoneyTreeTM India Report – Q2 ’16
7
Analysis of private equity investments
Investments by region
Q2 ’15, Q1 ’16 and Q2 ’16
Interestingly, in this quarter, except Bengaluru and
Mumbai, none of the other regions in the country
attracted many PE investors. Bengaluru led with
1.538 million USD in 44 deals, followed by Mumbai
with 1,500 million USD investments in 34 deals.
Hyderabad received investments worth 370 million
USD, followed by Chennai (367 million USD) and
BCR (287 million USD).
Investments by region
222
Bangalore
1,205
1,538
2,279
Mumbai
1,085
1,500
1,016
NCR
869
287
Q2 2015
Q1 2016
83
Hyderabad
320
370
Q2 2016
519
Chennai
55
367
1,873
Others
654
215
0
Note: NCR includes Delhi, Gurgaon and Noida.
PwC MoneyTreeTM India Report – Q2 ’16
500
1,000
1,500
2,000
2,500
Data provided by Venture Intelligence
9
Analysis of private equity investments
Top 20 PE deals
Q2 ’16
The top 20 deals comprised 82% of the total deal
value in Q2 ’16. The top five deals together
accounted for 58% of the total deal value. The
average deal value for this quarter was
29.1 million USD.
Top 20 PE deals in Q2 2016
Company
Industry
Investors
Amount
(US$ Mn)
Mphasis
IT & ITeS
Blackstone
1,100
Resurgent Power
Energy
CDPQ, SGRF, KIA
500
ICICI Home Finance
BFSI
TPG Capital
331
Sanmar Group
Manufacturing
Fairbridge Capital
300
Greenko Group
Energy
GIC, ADIA
230
Shriram Transport Finance
BFSI
IFC
150
Fractal Analytics
IT & ITeS
Khazanah
100
DFJ India Portfolio
BFSI
Newquest
100
Eicher Motors
Manufacturing
Cartica Capital
90
Future Supply Chain
Shipping & logistics
SSG Capital
88
Glenmark Pharmaceuticals
Healthcare & life sciences
IFC
75
Apollo Health & Lifestyle
Healthcare & life sciences
IFC
68
KKR
55
Classic Stripes - Promoter Holding Co Manufacturing
DFM Foods
Food & beverages
WestBridge
52
Janalakshmi Financial Services
BFSI
IFC
50
Bangalore International Airport
Travel & transport
Fairbridge Capital
49
Vectra Networks
IT & ITeS
Wipro Ventures
44
Repco Home Finance
BFSI
IFC
40
Sanghi Industries
Manufacturing
Piramal Enterprises
39
KLT Automotive and Tubular
Products
Manufacturing
KKR
35
Data provided by Venture Intelligence
PwC MoneyTreeTM India Report – Q2 ’16
10
3. Analysis of PE exits
Total PE exits
Total PE exits
PE exits in the second quarter of 2016 were among
the lowest in recent history, with 1.2 billion USD in
40 deals. This is a 54% drop as compared to the
previous quarter (2.6 billion USD in 39 deals) and a
70% drop from Q2 ’15 (4.0 billion USD in 71 deals).
4,500
With five exit deals worth 465 million USD, the
BFSI sector has emerged at the top, followed by
telecom with 206 million in one deal. IT saw exits
worth 173 million USD in 14 deals.
3,000
There were four PE-backed IPOs with a total IPO
value of 641 million USD.
3,500
3,079
2,560
2,500
1,913
2,000
1,514
1,500
948
1,000
500
801
1,227
973
948
706
554 607
574
669 789
210
308
268
795
1,7461,666
1,331
1,289
1,184
1,216 1,238
1,080
1,005
604
277
1,324
1,937
1,597
1,476
1,122
780
370
431 403
448 470
0
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
The public market has become the most preferred
route for exits this quarter, with a total exit value of
713 million USD in 17 deals. Strategic sales
followed, with a total exit value of 216 million USD
in 16 deals and secondaries worth 214 million USD
in five deals.
3,976
4,000
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
54
68
71
51
59
39
40
No. of
deals
Value of deals (in US$ Mn)
Data provided by Venture Intelligence
PwC MoneyTreeTM India Report – Q2 ’16
11
Analysis of PE exits
Exits by industry
Q2 ’15, Q1 ’16 and Q2 ’16
BFSI tops the exit chart this quarter with three of
the top five. This includes the exit of a group of PEs
from Equitas Holding, AU Financiers and Ujjivan.
The total exit value of the BFSI sector was 465
million USD in five deals, which is four times
higher than that of the previous quarter (110
million USD in three deals) and just a 7% drop from
Q2 ’15 (297 million USD in nine deals).
The telecom sector saw a single exit by Providence
from Idea Cellular (worth 206 million USD), which
made it the second largest sector for exits. In the
previous quarter, the sector saw a single exit worth
60 million USD. In Q2 ’15, the sector saw two exits
worth 271 million USD.
The IT sector saw exits worth 173 million USD in 14
deals, which is a 58% drop as compared to the
previous quarter (412 million USD in 12 deals) and
a 91% drop as compared to the year-ago period (1.9
billion in 15 deals).
Exits by industry
271
Telecom
60
206
497
BFSI
110
465
1,944
IT & ITeS
412
173
381
Manufacturing
Q2 2015
1,273
Q1 2016
30
Q2 2016
12
Energy
224
5
338
345
Healthcare & life sciences
84
532
Others
136
221
0
500
1,000
1,500
2,000
2,500
Data provided by Venture Intelligence
Note: Others include shipping & logistics, other
services, retail, food & beverages and hotels &
resorts.
PwC MoneyTreeTM India Report – Q2 ’16
12
Analysis of PE exits
Exits by type
Q2 ’15, Q1 ’16 and Q2 ’16
With four IPOs, the public market has become the
best exit route for PE investors in this quarter, with
a total exit value of 713 million USD in 17 deals. In
Q1’15, public market deals were worth 480 million
USD in 12 deals, while in Q2’15, the figures were 1.4
billion USD in 47 deals.
Exits by type
417
Buyback
188
40
Strategic sales saw exits worth 216 million USD in
16 deals, while secondary sales saw five deals worth
214 million USD. Two investors made exits worth
40 million USD via the buy-back route.
1,375
Public market sale
480
713
Q2 2015
Q1 2016
580
Secondary sale
Q2 2016
639
214
1,604
Strategic sale
1,253
216
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Data provided by Venture Intelligence
PwC MoneyTreeTM India Report – Q2 ’16
13
Analysis of PE exits
Top five PE exits
Q2 ’16
The top five exits comprised 58% of the total exit
value in Q2 ’16.
Top 5 PE exits in Q2 2016
Company
Industry
Investors
Equitas Holdings
BFSI
IFC, Sequoia Capital India, CLSA
Capital, FMO, Helion Ventures,
Aquarius, Aavishkaar Goodwelll, Lok
Capital, India Finacial Inclusion Fund,
MicroVentures, Creation Investments
217
Idea Cellular
Telecom
Providence
206
AU Financiers
BFSI
Warburg Pincus, IFC, ChrysCapital,
Motilal
112
Ujjivan Financial
Services
BFSI
IFC, FMO, Units, Wolfensohn & Co.,
Lok
79
Carat Lane.com
IT & ITeS
Tiger Global
75
Deal amount
(US$ Mn)
Data provided by Venture Intelligence
PwC MoneyTreeTM India Report – Q2 ’16
14
4. Active PE firms
World Bank’s PE arm, IFC, and the home-grown
Blume Ventures have entered into 11 deals each in
this quarter.
The most active PE investors in Q1 2016 are listed below.
Q2 2016 Investors
No. of deals*
Blume Ventures
11
IFC
11
Sequoia Capital India
7
Accel India
6
Kalaari Capital
6
Beenos Partners
4
Omidyar Network
4
Ratan Tata
4
SAIF
4
IDG Ventures India
3
Katabole Technology
Ventures
3
KKR
3
Matrix Partners India
3
Data provided by Venture Intelligence
* Number of deals includes both single and coinvestments by PE firms. Cases where two or
more firms have invested in a single deal are
accounted for as one deal for each firm.
PwC MoneyTreeTM India Report – Q2 ’16
15
5. Sector focus: IT & ITeS
Mergers and acquisitions (M&As) in the technology sector have boomed over the course of the last few months. From megamergers to mid-market and smallscale transactions, the resurgence has been considerable.
Deal activity in the global technology space has accelerated with recent announcements of Softbank acquiring ARM Holdings for US$32 billion, Uber China’s
merger with Didi Chuxing, Verizon’s acquisition of Yahoo! for 4.83 billion USD, and Walmart’s acquisition of the e-commerce company Jet for 3.3 billion USD.
These deals are expected to change the landscape of their specific industries—Uber exited from China with a hefty payout, and the competition is now left in an
uncertain position; and Verizon, with both Yahoo! and AOL, could be a major player in digital advertising.
Close to home, the technology industry, particularly e-commerce, has seen several M&As in the past quarter—Myntra’s acquisition of Jabong, Quikr’s
acquisition of Hiree to expand QuikrJobs, 1mg’s acquisition of diagnostics marketplace Medd, and the merger of TinyOwl and Roadrunnr were some of the
marquee deals. The e-commerce industry is poised for consolidation and a series of M&As this year are likely as companies as well as investors focus on
sustainable growth and profitability. Already, larger players in several e-commerce segments have started snapping up competitors to strengthen their position
(e.g., OYO Rooms’ acquisition of Zo Rooms).
Recurring trends of transformation, consolidation and investments in emerging technologies continue to demonstrate the rapid evolution within the technology
industry, which is also seeing increasing interest in digital assets from non-digital buyers, as seen in the cases of Future Group’s acquisition of Fabfurnish and
Titan buying a majority stake in CaratLane.
Going forward, we expect a gradual increase in deal activity as the year progresses. With increasing downward pressure on valuations, more assets will come to
market, enticing recently inactive serial technology acquirers to start shopping again. Non-digital buyers are likely to add to deal volumes, although perhaps not
proportionately to values, and are likely to focus on innovative technologies with the aim of making their business models more robust.
Sandeep Ladda
Leader, Technology
PwC India
PwC MoneyTreeTM India Report – Q2 ’16
16
Sector focus: IT & ITeS
Interestingly, early-stage investing has seen a
further drop in this quarter, with 164 million USD
from 65 deals.
3,769
3,500
3,000
2,635
2,423
2,500
2,000
1,568
1,899
1,631
1,500
1,000
850
500
366
217
0
151
555
422
307
233
353
397
165
99 65
273
106
311
111
148
1,396
988 985
791
625 647
No. of
deals
The average deal size has surged to 17.7 million
USD from 13.6 million USD in the last quarter.
Also, average early-stage investment surged to
2.5 million USD.
4,000
481
515
347
303
443
312
648
1,072 1,094
772
181
150
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
114
106
119
109
103
92
This time, buyouts clearly earned the top spot in
terms of stage of investing, with the single Mphasis
deal worth 1.1 billion USD. Growth stage attracted
180 million USD in 17 deals.
Value of PE investments in IT & ITeS sector (in US$ Mn)
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
With Blackstone’s 1.1-billion USD Mphasis deal,
technology continued its dominance as the most
attractive sector, with a total investment of 1.6
billion USD in 92 deals. This is 17% higher than the
previous quarter, but a drop of 14% as compared to
the year-ago period. In Q1 ’16, there were 103 deals
worth 1.4 billion USD, while Q2 ’15 saw 106 deals
worth 1.9 billion USD. There were no big ecommerce deals in this quarter.
28
18
Total PE investments
Data provided by Venture Intelligence
PwC MoneyTreeTM India Report – Q2 ’16
17
Sector focus: IT & ITeS
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 was
higher than the total PE funding in most quarters.
The second quarter of 2016 was no different, with
total PE investments seeing a 2% growth and tech
investment surging 17%.
Value of PE investments in IT & ITeS sector
800%
IT & ITeS investment growth
Total investment growth
700%
600%
500%
400%
300%
200%
100%
0%
-100%
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
-200%
PwC MoneyTreeTM India Report – Q2 ’16
18
Sector focus: IT & ITeS
Investments by stage of development
Q2 ’15, Q1 ’16 and Q2 ’16
On the back of the 1.1-billion USD buyout of the
BPO firm Mphasis by Blackstone, buyout deals
have topped the stage of investments in this
quarter. There were no buyout deals in the previous
quarter, while a single deal of 440 million USD was
recorded in the year-ago period.
The growth stage has seen 17 deals worth 180
million USD, a 72% drop as compared to Q1 ’16
(651 million USD in 19 deals) and a 73% drop from
Q2 ’15 (664 million USD from 20 deals). Similarly,
late-stage deals saw a huge decline. This quarter
has seen seven deals worth 158 million USD, while
the previous quarter saw a similar number of deals
that brought in investments worth 555 million
USD. In the year-ago period, it was 529 million
USD from 12 deals.
Early-stage investments dropped by 5%, from 173
million USD in Q1 ’16 to 164 million USD in Q2 ’16.
Further, PIPE deals saw 29 million USD in
two deals.
IT & ITeS investments by stage of development
440
Buyout
1,100
261
Early
173
164
664
651
Growth
Q2 2015
Q1 2016
Q2 2016
180
529
555
Late
158
6
18
29
PIPE
0
200
400
600
800
1,000
1,200
Data provided by Venture Intelligence
PwC MoneyTreeTM India Report – Q2 ’16
19
Sector focus: IT & ITeS
Investments by region
Q2 ’15, Q1 ’16 and Q2 ’16
Regionally, Bengaluru has made a comeback in Q2
’16. It became the favourite destination for
technology investments, attracting 75% of the total
invested money—that is, 1.2 billion USD across 31
deals. Mumbai lagged behind in the second slot
with 179 million USD in 19 deals.
IT & ITeS investments by region
146
Bangalore
434
1,220
1,061
Mumbai
409
179
474
NCR
Q2 2015
376
Q1 2016
105
Q2 2016
128
Chennai
8
15
90
Others
169
112
0
200
400
600
800
1,000
1,200
1,400
Data provided by Venture Intelligence
PwC MoneyTreeTM India Report – Q2 ’16
20
Sector focus: IT & ITeS
Investments by subsector
Q2 ’15, Q1 ’16 and Q2 ’16
IT services has become the top subsector with the
Mphasis deal worth 1.1 billion USD. Online
services, a distant second, attracted just 173 million
USD in 37 deals.
IT & ITeS investments by subsector
750
Online services
910
173
10
BPO
87
100
522
Mobile VAS
45
104
Q2 2015
Q1 2016
137
173
Enterprise software
Q2 2016
50
445
IT services
31
1,100
35
Others
151
103
0
200
400
600
800
1,000
1,200
Data provided by Venture Intelligence
PwC MoneyTreeTM India Report – Q2 ’16
21
Sector focus: IT & ITeS
PE exits in the sector
Q2 ’15, Q1 ’16 and Q2 ’16
As compared to the previous quarter, there was a
58% drop in exits in the IT & ITeS sector in Q2 ’16.
The sector saw exits worth 173 million USD in 14
deals, as compared to 412 million USD in 12 deals
in Q1 ’16. Strategic sales saw the highest number of
exits—worth 161 million USD in 11 deals.
Total IT & ITeS exits
2,500
1,944
2,000
1,719
1,500
1,056
1,000
679
612
393
379
316
500
176
93
77
22 26 29
58
81
287
261
105
78
67
19 12
32
12 25
225
48
615
448
258
185
340
129
225 194
96
156 154
106
181
412
98
10
Q1 2004
Q2 2004
Q3 2004
Q4 2004
Q1 2005
Q2 2005
Q3 2005
Q4 2005
Q1 2006
Q2 2006
Q3 2006
Q4 2006
Q1 2007
Q2 2007
Q3 2007
Q4 2007
Q1 2008
Q2 2008
Q3 2008
Q4 2008
Q1 2009
Q2 2009
Q3 2009
Q4 2009
Q1 2010
Q2 2010
Q3 2010
Q4 2010
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
Q4 2014
Q1 2015
Q2 2015
Q3 2015
Q4 2015
Q1 2016
0
56
162
685
519 498
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
18
15
9
14
12
No. of
deals
Value of deals (in US$ Mn)
Data provided by Venture Intelligence
PwC MoneyTreeTM India Report – Q2 ’16
22
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 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 spinouts from larger businesses
Growth-stage PE – This includes the following:

First or second round of investments worth 20
million USD or more
PwC MoneyTreeTM India Report – Q2 ’16
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 vehicle (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.
23
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Contacts
About PwC’s Technology Institute
Sandeep Ladda
Leader, Technology
PwC India
[email protected]
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
Sanjeev Krishan
Leader, Private Equity
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
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