A report by financial research platform VCCEdge, that was drawn by a study of the Private Equity, Mergers & Acquisitions, and Public Offerings spaces of the country and offers interesting insights into the financial trends of the year gone by.
First off, the year has been an exceptionally good one for private equity. Not only did this year’s inflow exceed that of last year by almost 67%, it also managed to cross the previous record of $18 billion — set in 2007 — with a comfortable margin of about $3 Billion. The private equity funds are normally deployed in purchasing the shares of private companies and are mustered by high net worth individuals and organizations. Unsurprisingly, the number of deals made also surpassed all previous records and 2015 witnessed an unprecedented 1,375 deals.
Another interesting fact was the increasing share of big-ticket deals (With a value of $100 million and above) are occupying of the total pie. In 2015, the said deals made up an impressive 63% of the total amount invested. In retrospect, 2015 had a total of 53 big-ticket deals with a value of $13.2 billion as compared to just 24 deals with a total value of $5.8 billion in 2014.
Consumer Discretionary, Information Technology, Financials, Industrials and Utilities remained the top attraction for the capital influx.
Also, about 27.5 per cent of the total private equity investments in 2015 was due to Angels and Venture Capital firms — making it the highest ever early stage contribution to the overall private investment. In figures, while Angel and seed investments recorded a growth of 64% — increasing to $327 million from $200 million in 2014 — the number of VC deals also rose significantly from 307 in recorded in 2014 up to 473 VC deals in 2015, with a net value of $5.3 Billion.
All in all, a good year for the country’s Start-up Ecosystem.
Mergers and Acquisitions on the other hand suffered a setback with deal value declining 31.5% to $22.9 billion in 2015, as compared to $33.5 billion from 2014. Domestic M&A declined as well, as per the report,
Deal value declined significantly for domestic M&A deals, though both inbound and outbound deals grew significantly. Domestic M&A deals fell 58.5% to $8 billion during the year. Inbound and outbound deal value grew 70% to $7.8 billion, and 95% to $5.1 billion, respectively, during the year.
Healthcare, Financials, Telecommunications, Information Technology and Materials were the sectors that saw the highest level of Merger and Acquisition action in 2015 with major corporations including Reliance, Apollo, OlaCabs etc . acquiring others in their respective sectors.
Most of the action occurred in Mumbai, which lived up to its name as the financial capital of the country and witnessed 289 deals worth $5.5 billion leading Bangalore, which came second with investment worth $3.4 billion spread over 304 deals. In the M&A segment too, Mumbai remained the favorite destination with 180 deals worth $4.6 billion occurring in the city.
Meanwhile, public interest in investment remained strong enough for companies to raise a net sum of $2.3 billion in public offerings during 2015, up 2.4 times from what was mustered in 2014.
Well, the year certainly marked a gathering interest in both investments and start-ups. While high-net worth individuals and organizations alike seem to be more keen to acquire assets in companies, the ecosystem has also become significantly start-up friendly — to the point that there are now various angels as well as VCs who are able and willing to sponsor them.
Also, while drawing exact conclusions from the increasing private equity investment is hard, some studies do suggest that higher employment, labor productivity and profitability may be some of the consequences of private equity. All in all, the trends generated by the outgoing year seem to bode well as far as the investment and start-up ecosystems in the country are concerned.
Happy New year Folks!