PE firms invest $1.01 bn in Oct-Dec qtr: PwC survey

Private equity firms invested USD 1,010 million in India, down 32 per cent, during the October- December quarter, says a PwC survey.

According to PwC MoneyTree India report -- a quarterly study of private equity investment activity based on data by Venture Intelligence -- PE firms invested USD 1.01 billion in 82 deals during the fourth quarter of 2012, a decline of 32 per cent from Q4, 2011 both in value and volume of deals.

With 30 deals worth USD 167 million, the IT and IT enabled services (ITeS) sector continued to be the leader in value as well as volume. The investment in the sector constituted 17 per cent of the total investment value, and nearly 37 per cent of the total number of deals in Q4.

"In the IT services segment, we have seen investments in mid-tier companies, who primarily have niche service offerings and PE firms are cherry-picking such opportunities. As a corollary, plain vanilla IT services segment may not attract much investments in the near future," PwC Leader, Technology, Sanjay Dhawan said.

The online services segment received the second highest level of investment worth USD 49 million from 10 deals, which is the highest in terms of volume this quarter.

"Due to growing popularity and acceptability of online services as a sales channel in India, the business model of such companies has become more acceptable and their potential revenue pipeline more convincing.

"As a result, we are witnessing increased interest by PE companies in this segment, typically entering as early-stage investors," Dhawan said.

In terms of investment value, the agri-business sector stood second, generating USD 146 million from four deals, while the education sector recorded eight deals worth USD 55 million.

The shipping and logistics sector witnessed two deals worth USD 48 million and the textiles and garments sector has reported four deals worth USD 35 million.

By region, the National Capital Region (NCR) surpassed Mumbai in the last quarter again as the top region with funding of USD 318 million from 16 deals.

The top 20 deals comprised 72 per cent of total deal value in Q4 2012. The top three deals constituted 38 per cent of the total top 20 deal value, the report said.