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PricewaterhouseCoopers India Pvt Ltd
MoneyTreeTM India Report Q1 2017
Technology Institute
This special report provides summary results of Q1 ’16, Q4 ’16, and Q1 ’17.
Data provided by Venture Intelligence
PwC MoneyTree India – Q1 2017 2
Table of contents
1. Overview 3
2. Analysis of PE investments 4 Total equity investments in PE-backed companies 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 Total PE investments 16 Investments by stage of development 17 Investments by region 18 Investments by subsector 19 PE exits in the sector 20
Definitions 21
PwC MoneyTree India – Q1 2017 3
1. Overview
2017 opened on a strong note, with the first quarter of the year recording private equity (PE) investments worth around 6.8 billion USD across 130 deals. Despite a decline in deal volume, investment value reported a 31% increase over the previous quarter and a 61% increase over the same period last year, indicating an optimism in investor sentiments towards India’s macros.
The Information Technology (IT) & IT-enabled services (IT & ITeS) sector witnessed the highest investment activity, with around 3.3 billion USD invested across 66 deals; this accounted for almost 50% of the total investment value and volume in the first quarter of 2017. The Telecom sector recorded over 1 billion USD worth of investments across two deals, which included KKR and CPPIB’s nearly 1-billion USD investment in Bharti Infratel. This was closely followed by the Banking, Financial services & Insurance (BFSI) sector, with a little under 1 billion USD invested across 19 deals. Healthcare & Life sciences reported investments worth 544 million USD across 10 deals—more than double the investment value as compared to the previous quarter. Although the Energy sector retained its position among the top sectors for PE investments in this quarter, it witnessed a 61% decline in deal value and a 70% decline in deal volume. The Logistics sector witnessed a significant increase in activity over the same period last year, with 252 million USD invested across seven deals.
Late-stage investments accounted for almost 44% of the investment value this quarter. Early-stage investments declined by around 30% in terms of value as compared to the previous quarter, while the value of PIPE deals increased almost threefold over the last quarter of 2016 to around 1.6 billion USD.
From an exit standpoint, this quarter recorded the second highest activity in the last decade, with around 3.2 billion USD across 53 exits, a 72% increase in value over the previous quarter and a 37% increase in value over the same period last year. Secondary sales accounted for around 41% of the exit value in this quarter, indicating a probable increase in secondary opportunities ahead.
With valuations at an all-time high, deal activity in the coming quarters is likely to continue at a watchful pace, with investors looking for quality deals. The government continues to improve economic resilience with the proposed dismantling of the Foreign Investment Promotion Board (FIPB) and the introduction of the Goods and Services Tax (GST), which should drive investor confidence and positivity going forward.
Sanjeev Krishan Leader, Private Equity and Transaction Services PwC India
PwC MoneyTree India – Q1 2017 4
2. Analysis of PE investments
Total equity investments in PE-backed companies The new year has had a very strong opening quarter in terms of private equity (PE) investments. Q1 ’17 recorded total investments worth around 6.8 billion USD in 130 deals. This is a new high for PE investments over the last decade—second only to the approximately 6.9 billion USD attracted in Q3 ’15. Compared to the year-ago period (which saw investments worth around 4.2 billion USD in 214 deals), there was a 61% increase in value, but a 39% decrease in volume. Further, as compared to Q4 ’16 (when investments stood at around 5.2 billion USD in 196 deals), the value of deals in this quarter has grown by 31%, despite a volume decrease of 34%. The average deal size for Q1 ’17 was around 52.3 million USD.
The Information technology & IT-enabled services (IT & ITeS) sector reclaimed the top spot this quarter, largely on the strength of a 1.4 billion USD investment from Tencent and others in Flipkart. The sector witnessed a 318% jump in deal value despite a 40% decline in deal volume compared to the last quarter. Telecom slipped to the second position in Q1 ’17, with an investment flow of about 1 billion USD in two deals. This was a 38% decrease in deal value compared to Q4 ’16. Engineering & Construction, Media & Entertainment and Healthcare & Life sciences all received a significant boost in Q1 ’17, while PE investment in the
Manufacturing and Energy sectors faced a marked dip in the first quarter.
Late-stage investments were the most popular route for PE investors in this quarter—with a total of 19 deals worth approximately 3 billion USD. PIPE deals, which came second, witnessed a massive 243% increase in value in Q1 ’17, with investments worth around 1.6 billion USD in 13 deals. Buyouts, which were the leading stage of development in the last quarter, faced a significant drop—from around 2.1 billion USD in Q4 ’17 to 591 million USD in this quarter.
Regionally, National Capital Region (NCR) raced ahead of Mumbai with total investments worth around 2.4 billion USD. With a staggering 790% increase in PE investment value, Bengaluru climbed to the second position, pushing Mumbai down to the third spot.
Total private equity investments (in US$ mn)
No.
of
deal
s
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
225
187
241
199
214
163
144
196
130
Data provided by Venture Intelligence
1,384
2,164
1,790
2,0062,578
2,128
4,577
5,403
3,825
2,7292,581
1,196755
814865
1,7492,114
2,198
2,397
1,948
4,273
2,565
3,952
1,853
2,314
2,165
4,026
1,3841,299
4,848
1,571
2,3482,456
3,172
2,882
4,4654,315
4,667
6,897
3,951
4,2154,460
3,400
5,208
6,797
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q1
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Value of deals (in US$ Mn)
Analysis of PE investments
PwC MoneyTree India – Q1 2017 5
Investments by industry Q1 ’16, Q4 ’16 and Q1 ’17
With 66 deals worth approximately 3.3 billion USD, the IT & ITeS sector overshadowed the other sectors in Q1 ’17. Its dominance was primarily the result of two large deals—an investment of 1.4 billion USD by Tencent and others in Flipkart and CPPIB’s 720-million USD investment in GlobalLogic. Clearly, the sector has bounced back after the brief slump it experienced in the last quarter.
Telecom, the top sector in Q4 ’16, ranked a distant second in this quarter, with investments worth about 1 billion USD in two deals. Although this was a 38% drop in investment value compared to Q4 ’16, if we look at the year-ago period, the sector may safely be considered to be continuing to enjoy its healthy PE investment streak.
Engineering & Construction displayed a notable 467% spike in investments compared to Q4 ’16, with one deal worth 52 million USD. Media & Entertainment (222%) and Healthcare & Life sciences (137%) both witnessed significant growth in PE investment value in this quarter, closing with 126 million USD in three deals and 544 million USD in ten deals, respectively.
Investments by industry (in US$ mn)
Data provided by Venture Intelligence
1,409
230
10
948
187
462
24
25
114
0
21
785
782
571
1,673
935
424
229
13
26
9
71
39
437
3,270
221
1,032
996
31
544
17
30
52
45
126
434
0 500 1,000 1,500 2,000 2,500 3,000 3,500
Information technology (IT) & IT-enabled services(ITeS)
Energy
Telecom
Banking, Financial services & Insurance (BFSI)
Manufacturing
Healthcare & Life sciences
Food & Beverages
Agri-business
Engg. & Construction
Fast-moving consumer goods (FMCG)
Media & Entertainment
Others
Q1 2016
Q4 2016
Q1 2017
Note: Others include Other services, Hotels & resorts, Sports & fitness, Agribusiness and Retail.
Analysis of PE investments
PwC MoneyTree India – Q1 2017 6
In terms of deal activity, the first quarter saw the IT & ITeS space continue to account for a large share of overall deal value despite a drop in volume. Although the quarter witnessed large investments in Indian eCommerce players such as Flipkart, Ola and Paytm, for the most part, the segment saw funds drying up due to the rationalisation of investments and start-up valuations. However, the rise of India-focused technology venture funds, the government’s structural reforms such as the Goods and Services Tax (GST) and the recently announced digital measures in Budget 2017 are likely to accelerate deal activity in the segment.
Sandeep Ladda Leader, Technology PwC India
‘
‘
Analysis of PE investments
PwC MoneyTree India – Q1 2017 7
Investments by stage of development Q1 ’16, Q4 ’16 and Q1 ’17
In the first quarter of 2017, late-stage investments claimed the top spot in terms of stage of development, with an inflow of approximately 3 billion USD across 19 deals. This was a 145% increase in deal value compared to Q4 ’16. The upward trend persists for PIPE deals—with a 243% rise from 465 million USD across 12 deals in Q4 ’16 to nearly 1.6 billion USD in 13 deals in the current quarter. Growth-stage investments rounded off the top three, with 26 deals worth around 1 billion USD. Buyouts, which were the top source of PE investment in the previous quarter, slipped to the fourth position in this quarter, seeing a 72% decline in deal value.
Data provided by Venture Intelligence
257
1,038
1,437
2
325
856
300
311
873
1,211
0
465
2,143
205
221
1,079
2,964
0
1,595
591
348
0 500 1,000 1,500 2,000 2,500 3,000 3,500
Early
Growth
Late
Pre-IPO
PIPE
Buyout
Other
Q1 2016
Q4 2016
Q1 2017
Investments by stage development (in US$ mn)
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 PE investments
PwC MoneyTree India – Q1 2017 8
Investments by region Q1 ’16, Q4 ’16 and Q1 ’17
In terms of region, NCR and Bengaluru surged ahead of Mumbai in the first quarter of the new year. With investments worth around 2.4 billion USD across 33 deals, the capital region witnessed a 120% jump in PE investment value compared to the last quarter. Buoyed by investments worth almost 2 billion USD in 32 deals, Bengaluru rose to the second position. Faced with a 40% decline in PE investment value, Mumbai came in third, closing the quarter with 32 deals worth around 1.5 billion USD.
Data provided by Venture Intelligence
1,250
1,032
880
320
80
652
223
2,602
1,091
75
280
937
1,980
1,548
2,405
160
59
645
0 500 1,000 1,500 2,000 2,500 3,000
Bengaluru
Mumbai
NCR
Hyderabad
Chennai
Others
Q1 2016
Q4 2016
Q1 2017
Investments by region (in US$ mn)
Note: NCR includes Delhi, Gurgaon and Noida.
Analysis of PE investments
PwC MoneyTree India – Q1 2017 9
Top 20 PE deals Q1 ’17
The top 20 deals comprised 83% of the total deal value in Q1 ’17. The top five deals together accounted for nearly 55% of the total deal value. The average deal size for this quarter was around 52.3 million USD.
Top 20 PE deals in Q1 2017
Company Industry Investors Amount (US$ mn)
Flipkart IT & ITeS Tencent, Others 1,400
Bharti Infratel Telecom KKR, CPPIB 952
GlobalLogic IT & ITeS CPPIB 720
Kotak Mahindra Bank BFSI CDPQ, CPPIB 338
Ola IT & ITeS SoftBank Corp, Others 330
Manipal Health Enterprises Healthcare & Life sciences Temasek 215
Paytm E-Commerce IT & ITeS SAIF, Alibaba 200
Condis Healthcare Healthcare & Life sciences India Value Fund 200
ReNew Wind Power Energy JERA 200
Orbit Tours and Travels IT & ITeS Emerging India 180
PVR Cinemas Media & Entertainment Warburg Pincus 120
Spandana Sphoorty Financial BFSI Kedaara Capital, Ontario Teachers’ Pension 100
Home First Finance Company BFSI India Value Fund 100
Delhivery Shipping & Logistics Carlyle, Tiger Global 100
L&T Infrastructure Finance BFSI IFC 100
Resonance Eduventures Education KKR 97
Planetcast Media Services Telecom AION Capital 80
India Infoline BFSI Fairfax Holdings 76
Disha Microfin BFSI India Value Fund, TA Associates, LeapFrog, Tata Opportunities Fund, Others
75
Zinka Logistics IT & ITeS IFC, Accel India, Flipkart, Sands Capital, Others
70
Data provided by Venture Intelligence
PwC MoneyTree India – Q1 2017 10
3. Analysis of PE exits
Total PE exits Q1 ’17 In Q1 ’17, there was a 72% increase in the value of PE exits compared to the last quarter. In all, there were 53 deals worth 3.2 billion USD. In Q4 2016, the total exits were valued at 1.8 billion USD in 68 deals. Further, there was a 37% rise in value compared to the year-ago period (approximately 2.3 billion USD in 43 deals).
IT & ITeS was the top sector in terms of PE exits in this quarter, with a total of nine exits worth around 1.1 billion USD. BFSI and Healthcare & Life sciences followed, with exits worth around 683 million USD in 11 deals and 497 million USD in 10 deals, respectively. The Manufacturing sector witnessed a decline (83%) in exit value this quarter.
Gaining a slight edge over public market sales, secondary sales emerged as the most preferred exit route, with a total value of around 1.3 billion USD in eight deals. In all, 28 exits worth around 1.3 billion USD followed the public market sale route in Q1 ’17.
Total PE exits (in US$ mn)
No.
of
deal
s 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
73
73
55
69
43
49
71
68
53
Data provided by Venture Intelligence
554574607
948801
669
1,514
789948
308210268277
706604
370
9731,005
1,227
3,079
780
1,080
795
431
1,324
403
1,4761,597
1,122
1,913
448
1,216
470
1,2381,289
1,331
1,978
3,977
1,820
1,774
2,317
1,333
2,478
1,843
3,169
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Value of deals (in US$ mn)
Analysis of PE exits
PwC MoneyTree India – Q1 2017 11
Exits by industry Q1 ’16, Q4 ’16 and Q1 ’17
IT & ITeS led exits by industry, with nine deals worth about 1.1 billion USD. This was a more than fivefold increase in exit value compared to the last quarter (around 212 million USD in 11 deals) and includes the exit of Apax Partners from GlobalLogic and that of Reliance Venture, Saama Capital and Sapphire Ventures from One97 Communications—the top two exits in this quarter.
BFSI was the second largest sector for exits. In all, there were 11 exits worth around 683 million USD. This represents a 63% increase in value compared to the previous quarter, which saw exits worth about 419 million USD in 15 deals.
Healthcare & Life sciences came in third with 10 exits worth around 497 million USD. This was a substantial increase compared to the previous quarter, when exits from this sector stood at 197 million USD in 10 deals. Although there were only two exits from the Telecom sector in Q1 ’17, they were of high value (compared to the last quarter), with Providence’s exit from Idea Cellular being the fifth highest exit of the quarter. The Manufacturing sector reported a downward trend in exits in this quarter.
Data provided by Venture Intelligence
60
110
427
1,263
0
345
112
4
419
212
714
29
197
270
216
683
1,094
119
39
497
522
0 200 400 600 800 1000 1200 1400
Telecom
BFSI
IT & ITeS
Manufacturing
Energy
Healthcare & Life sciences
Others
Q1 2016
Q4 2016
Q1 2017
Exits by industry (in US$ mn)
Note: Others include Shipping & Logistics, Other services, Retail, Food & Beverages and Hotels & Resorts.
Analysis of PE exits
PwC MoneyTree India – Q1 2017 12
Exits by type Q1 ’16, Q4 ’16 and Q1 ’17
Secondary sale was the preferred exit route for PE investors in this quarter, with a total exit value of around 1.3 billion USD in eight deals. In Q4 ’16, secondary sales deals were worth around 510 million USD in 10 deals, while in Q1 ’16, the figures were around 585 million USD in 12 deals. Public market sales saw exits worth about 1.3 billion USD in 28 deals, while strategic sales saw 15 deals worth 531 million USD. Two exits worth 90.8 million USD were made via the buyback route in this quarter.
Data provided by Venture Intelligence
188
278
585
1,260
52
970
509
307
91
1,251
1,296
531
0 200 400 600 800 1,000 1,200 1,400
Buyback
Public market sale
Secondary sale
Strategic sale
Q1 2016
Q4 2016
Q1 2017
Exits by type (in US$ mn)
Analysis of PE exits
PwC MoneyTree India – Q1 2017 13
Top five PE exits Q1 ’17
The top five exits comprised nearly 5o% of the total exit value in Q1 ’17.
Top 5 PE exits in Q1 2017
Company Industry Investor Deal amount
(US$ mn)
GlobalLogic IT & ITeS Apax Partners 720.0
One97 Communications IT & ITeS Reliance Venture, Saama Capital, Sapphire Ventures 250.0
Manipal Health Enterprises Healthcare & Life sciences India Value Fund 215.0
Condis Healthcare Healthcare & Life sciences OrbiMed, Ascent Capital 200.0
Idea Cellular Telecom Providence 193.2
Data provided by Venture Intelligence
PwC MoneyTree India – Q1 2017 14
4. Active PE firms
IDG Ventures India entered into eight deals in this quarter; Blume Ventures, Accel India and Sequoia Capital India followed with six deals each.
The most active PE investors in Q1 ’17 are listed at right.
Q1 2017 investors No. of deals Q1 2017 investors No. of deals IDG Ventures India 8 Pravega Ventures 2 Blume Ventures 6 Shunwei Capital 2 Accel India 6 Lok Capital 2 Sequoia Capital India 6 ADB 2 Kalaari Capital 5 Orios VP 2 Mayfield 4 SBICAPS Ventures 2 IFC 4 Google Capital 2 Nexus Venture Partners 4 Eight Roads Ventures 2 India Value Fund 3 Matrix Partners India 2 Endiya Partners 3 Axilor Ventures 2 Michael & Susan Dell Foundation 3 Paragon Partners 2 ChrysCapital 3 Aavishkaar 2 Village Capital 3 Fairfax Holdings 2 IvyCap Ventures 3 Kae Capital 2 Beenext 3 Tencent 2 TA Associates 3 SAIF 2 PremjiInvest 2 NYLIM Jacob Ballas Funds 2 Sistema Asia Fund 2 AdvantEdge Partners 2 Everstone 2 Pi Ventures 2 CPPIB 2 Ideaspring 2 Temasek 2 SIDBI VC 2 Villgro 2 SoftBank Corp 2 3ONE4 Capital 2
Data provided by Venture Intelligence
* Number of deals includes both single and co-investments 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 MoneyTree India – Q1 2017 15
5. Sector focus – IT & ITeS sector
In 2016, the Indian IT industry felt the impact of the global economic slowdown and political upheavals. Accordingly, corporates became more conservative in their decision making.1
Interestingly, in FY17, these trends did not slow down investments in new technologies such as IoT, AI, automation, smart mobility, P2P payments and remote monitoring, thus paving the way for their entry into the mainstream digital economy. Indian IT companies were also seen to boost their automation credentials in the wake of customer demands for lower prices. This could soon lead to a natural change in hiring patterns, with unconventional roles likely to be more attractive for high-margin digital jobs.
This quarter saw the government continue its big push to the digital economy. The industry welcomed a host of digital measures such as ‘Digi Gaon’, the Bharat Interface for Money (BHIM) app, the Payments Regulatory Board and AadhaarPay. Rationalisation of regulations and, in particular, labour laws is also expected to have a far-reaching effect on the ease of doing business. Budget 2017 also addressed one of the key concerns related to tax disputes abroad and foreign tax credit (FTC). Additionally, Make in India was given a significant boost in the Budget through increased allocation for electronics manufacturing under the Modified Special Incentive Package Scheme (M-SIPS) and Electronic Development Fund (EDF).
To support investments and the scaling up of start-ups, the government recently changed provisions for carrying forward losses and extended the time period for eligibility for the three-year income tax exemption. However, amidst valuation markdowns and slow growth, profitability and sustainability remain the key focus areas for eCommerce players in India. As a result, consolidation is expected to continue as poorly performing players join forces with the larger ones to create synergies.
2016 saw a slowdown in funding for the eCommerce sector, leading to players moving away from heavy discounts to same-day delivery and providing better customer experiences.1 The funding slowdown has shown some signs of improvement and the first quarter ended with a bang, with Flipkart announcing the Indian start-up ecosystem’s largest funding round—a massive 1.4 billion USD investment led by Tencent, eBay and Microsoft.
Meanwhile, in the US, which is the single largest revenue source for the Indian IT industry, new immigration policies and visa reforms could create barriers to on-site deployment of Indian tech specialists. At a time when traditional outsourcing is under threat of commoditisation, IT players could see a further strain on their diminishing margins. To keep pace with the evolving trends, Indian IT companies are expected to adopt new on-demand business models and focus on strategic tuck-in digital acquisitions.
Sandeep Ladda Leader, Technology PwC India
1 NASSCOM, The IT-BPM Sector in India: Strategic Review 2017, Feb 2017
Sector focus – IT & ITeS sector
PwC MoneyTree India – Q1 2017 16
Total PE investments
In Q1 ’17, PE investments in the IT & ITeS sector showed remarkable growth compared to both the previous quarter as well as the year-ago period. There were a total of 66 deals worth approximately 3.3 billion USD. In comparison, there were 110 deals worth around 782 million USD in Q4 ’16 and 122 deals worth around 1.4 billion USD in Q1 ’16. These numbers indicate a clear and substantial rise in the size of individual deals.
Late-stage deals were the most preferred route for PE investments in the IT & ITeS sector in this quarter. In all, there were three deals worth around 2.1 billion USD. Despite a 131% increase in deal value compared to the previous quarter, growth-stage investments slipped to the second position in Q1 ’17. A total of 12 deals worth 807 million USD were made through this channel. Finally, there was a slowdown in both early-stage deals and buyouts in Q1 ’17.
In terms of region, Bengaluru acquired a major lead over the other cities. NCR and Mumbai also showed extremely positive growth, while Chennai faced a sizeable 86% dip in IT & ITeS investment compared to the previous quarter. Finally, in terms of subsector, Online services outshadowed the others, receiving almost 2 billion USD across 27 deals. The value of PE investments in BPOs, on the other hand, witnessed a significant decline—from 166 million USD in Q4 ’16 to 64 million USD in this quarter.
The average deal size this quarter was around 49.5 million USD compared to about 7.1 million USD in the last quarter.
Data provided by Venture Intelligence
In Q1 ’17, funding growth for the IT & ITeS sector and overall PE investment moved in parallel. While tech investment rose, impressively, by around 318% compared to the last quarter, total PE funding enjoyed a 31% increase.
217
850
366
151
625647
307
233
555353
422
165
9965
397106
273111148
311
791
347515443
303312
2,423
181150
481648
988 985
772
1,568
2,635
1,9921,893
3,846
1,247
1,4091,645
1,255
782
3,270
0
500
1,000
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Value of PE investments in IT & ITeS sector (in US$ mn)
Value of PE Investments in IT & ITeS sector (in US$ mn)
Sector focus – IT & ITeS sector
PwC MoneyTree India – Q1 2017 17
Investments by stage of development Q1 ’16, Q4 ’16 and Q1 ’17
Late-stage deals were the preferred route for PE investments in the IT & ITeS sector in Q1 ’17. The quarter saw three deals worth around 2.1 billion USD through this mode. This represents a staggering increase compared to both the previous quarter and the year-ago period, when investments stood at 11 million USD in two deals and 486 million USD in six deals, respectively.
Growth-stage deals, which followed, saw investments worth 807 million USD in 12 deals. In comparison, in the previous quarter, 22 deals worth 350 million USD were made through this route.
While the value of PIPE deals doubled compared to the previous quarter (from 11 million USD to 22 million USD), early-stage deals and buyouts showed a decline. In value terms, the fall in value of early-stage deals in Q1 ’17 ranged between 30-40% compared to the previous quarter and the year-ago period.
Data provided by Venture Intelligence
0
211
694
486
18
185
224
350
11
11
180
141
807
2,120
22
0 500 1,000 1,500 2,000 2,500
Buyout
Early
Growth
Late
PIPE
Q1 2016
Q4 2016
Q1 2017
Investments by stage of development (in US$ mn)
Sector focus – IT & ITeS sector
PwC MoneyTree India – Q1 2017 18
Investments by region Q1 ’16, Q4 ’16 and Q1 ’17
Bengaluru zipped past the other cities in the first quarter of the year. Its IT & ITeS sector amassed investments worth around 1.6 billion USD in 25 deals. This was a more than thirteen times increase in deal value compared to the previous quarter and an over three-and-a-half times increase compared to Q1 ’16.
NCR and Mumbai finished second and third, with 957 million USD in 18 deals and 595 million USD in 11 deals, respectively.
Data provided by Venture Intelligence
457
448
378
21
104
122
119
205
65
271
1,619
595
957
9
90
0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000
Bengaluru
Mumbai
NCR
Chennai
Others
Q1 2016
Q4 2016
Q1 2017
Investments by region (in US$ mn)
Sector focus – IT & ITeS sector
PwC MoneyTree India – Q1 2017 19
Investments by subsector Q1 ’16, Q4 ’16 and Q1 ’17
As in Q4 ’16, Online services was the clear front-runner in this quarter as well, with 27 deals worth around 2 billion USD. This represented a nearly five times increase in deal value compared to the last quarter.
Mobile VAS saw investments leap from 50 million USD in 13 deals in Q4 ’16 to 372 million USD in 13 deals in this quarter.
Data provided by Venture Intelligence
1,111
87
55
99
29
28
405
166
50
117
0
44
1,968
64
372
102
738
26
0 500 1,000 1,500 2,000 2,500
Online services
Business processoutsourcing (BPO)
Mobile VAS
Enterprise software
IT services
Others
Q1 2016
Q4 2016
Q1 2017
Investments by subsector (in US$ mn)
Sector focus – IT & ITeS sector
PwC MoneyTree India – Q1 2017 20
PE exits in the sector Q1 ’16, Q4 ’16 and Q1 ’17
In comparison with the previous quarter, there was a significant increase in exits in the IT & ITeS sector in Q1 ’17. The sector saw exits worth about 1.1 billion USD in nine deals compared to 212 million USD in eleven deals in the previous quarter. Secondary sales were the preferred exit route in Q1’17—with one deal worth 720 million USD.
No.
of
deal
s 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 16
15
14
18
11 9
Data provided by Venture Intelligence
93176
2277
2629
679
58
316379
81 105 78
261 287
56 1967
12 12 32 25
16248
393
225
156
1,719
340
612
154
96 129106
1,056
258
225
519
194
498
181185
10
448
685
1,944
103
622
427
98
879
212
1,094
0
500
1000
1500
2000
2500
Q1
2004
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2004
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2004
Q4
2004
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2005
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2005
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2005
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2005
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2008
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2009
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2009
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2010
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2010
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2010
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2016
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2016
Q1
2017
Value of deals (in US$ mn)
Total IT & ITeS exits
PwC MoneyTree India – Q1 2017 21
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 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 vehicle (SPV) or project-level investments.
Types of PE exits
Buyback: 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.
www.pwc.com/globalmoneytree www.pwc.in
Contacts Sandeep Ladda Leader, Technology PwC India [email protected]
Sanjeev Krishan Leader, Private Equity PwC India [email protected]
This report was researched and written by the following:
Pradyumna Sahu Executive Director, Markets & Industries PwC India [email protected]
Dion D’Souza Manager, Markets & Industries PwC India [email protected]
Suneet Mohan Knowledge Manager, Technology 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. For more information, please contact Raman Chitkara, Global Technology Industry Leader, at [email protected]
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