This year began on a slow pace for private equity (PE) and venture capital (VC) investments with deals in January falling 49% from the year earlier to $1.8 billion, said EY. Deal volume, however, climbed 65% on a year-on-year basis, the consulting and auditing firm said in a report.
The drop in deal value is mainly due to the lack of large, $1-billion-plus deals last month.
“After a strong performance in 2018, headline numbers on PE/VC investment activity in January 2019 appear to indicate a comparatively subdued start. However, we believe this data is skewed on account of the absence of large deals in January 2019. Underlying data indicates a robust start to PE/VC investment activity in January 2019 with significant increase in growth, buyout and startup investments on a y-o-y basis,” said Vivek Soni, partner and national leader, private equity services, EY.
The month saw four large deals ($100-million-plus deals) totalling $1.1 billion, compared to five large deals worth $2.8 billion in January 2018, and six large deals worth $2.3 billion in December 2018. The largest deal this January was SoftBank’s $397 million investment in FirstCry, an e-commerce platform for child and baby products. The other big deals during the month included Apax’s $230 million investment in Fractal Analytics, and AION’s buyout of InterGlobe Technologies for $230 million.
The strong trend of buyouts continued this year with four deals worth $504 million, rising 20% from January 2018.
A sector-wise break up shows e-commerce leading the pack with 11 deals worth $607 million, followed by technology with $438 million across nine deals.
Exit deals dropped significantly, with January recording transactions worth $360 million against $969 million in the previous year, largely due to fewer large exits. The largest exit in January 2019 saw TA Associates and Khazanah selling their entire stakes in Fractal Analytics to Apax for $200 million.
In terms of number of exits, January 2019 recorded just 13 exits, compared to 29 last year. The lower exit deal activity was primarily on account of fewer open market exits. Besides, there were no PE-backed initial public offerings in January.
This article was first published on livemint.com