pricewaterhousecoopers india pvt ltd moneytree india ... · pricewaterhousecoopers india pvt ltd...

Click here to load reader

Post on 17-Jun-2018

223 views

Category:

Documents

1 download

Embed Size (px)

TRANSCRIPT

  • www.pwc.com/globalmoneytree www.pwc.in

    PricewaterhouseCoopers India Pvt Ltd

    MoneyTreeTM India Report Q4 2014

    Technology Institute

    This special report provides summary results of Q4 13, Q3 14, and Q4 14.

    Data provided by Venture Intelligence

  • PwC MoneyTreeTM India Report Q4 14 2

    Table of contents

    1. Overview Good times ahead?

    3 3

    2. Analysis of private equity investments 5 Total equity investments in PE-backed companies 5 Investments by industry 6 Investments by stage of development 8 Investments by region 9 Top 20 PE deals 10

    3. Analysis of PE exits 11 Total PE exits 11 Exits by industry 12 Exits by type 13 Top five PE exits 14

    4. Active PE firms 15 5. Sector focus: IT & ITeS sector 16

    Total PE investments 16 Investments by stage of development 18 Investments by region 19 Investments by sub-subsector 20 PE exits in the sector 21

    6. Definitions 22 Contacts 23

  • PwC MoneyTreeTM India Report Q4 14 3

    1. Overview

    Good times ahead?

    Buoyed by the fourth quarters performance, private equity (PE) investments in India in 2014 surged by over 30% with a total investment value of 12.7 billion USD compared to last years 9.8 billion USD. During the October-December (Q4) period, total private equity investments in India reached 4.4 billion USD across 107 deals. This has been the most noteworthy performance since the incredible Q4 07 which saw investments worth 5.4 billion USD.

    The surge in the yearly investments can be attributed mainly to the increasing interest in e-commerce, which saw a total investment of over 2.5 billion USD, and the fourth quarter has not been that different. The information technology and information technology-enabled services (IT & ITeS) and tech sectors attracted 59% of the total investment, with most of the money invested in e-commerce, and bumped up by considerable investments in Flipkart and Snapdeal.

    We expect the growth in PE investments to continue in 2015, anticipating even higher levels of growth backed by economic reforms on the horizon. The exit activity of 2006-08 vintage investments will also encourage this. Along with IPOs and secondaries, the reforms are expected to bring more inbound strategic investors as well.

    Opening of foreign direct investment (FDI) in new sectors and enhancing its limits in sectors such as insurance will be helpful as would the easing of labor laws and other government initiatives. The government has also launched the Make it in India campaign, but for it to have a positive impact, it is critical that the ease of doing business in India improves.

    Pick-up in demand owing to anticipated higher growth rates, the lower interest rate regime and lower oil prices are also likely to create investment opportunities in the consumer sector including derivative sectors such as logistics, warehousing and business services. Healthcare and life sciences are expected to continue to receive significant PE attention.

  • PwC MoneyTreeTM India Report Q4 14 4

    Though there is a high interest, infrastructure is unlikely to see any significant PE activity in 2015 since the investing experience in this sector so far has been unsatisfactory. However, it is quite likely that as the government steps on the pedal for infrastructure investments and revives the investment cycle, private investors, including PE investors, would be keen to invest in businesses providing services to this sector.

    The financial services sector is also expected to see significant interest on both book-based and fee-based businesses. The focus will mainly be on technology enabled financial services platforms and the activity resulting from payments and small banks licenses. E-commerce is expected to continue to generate interest, as is the IT sector.

    However to achieve the above, the ability of the government to speed-up reforms is the key to the activity levels in 2015, and private equity investors are watching.

    Sanjeev Krishan Private Equity Industry Leader PwC India

  • PwC MoneyTreeTM India Report Q4 14 5

    2. Analysis of private equity investments

    Total equity investments in PE-backed companies

    Private equity investments in India have witnessed a phenomenal fourth quarter with 4.35 billion USD across 107 deals, a long-awaited development since the incredible Q4 07 which saw 5.40 billion USD worth of investments. Despite a 9% drop in the number of deals compared to the previous quarter, the deal value rose by 55%. In Q3 14, 2.82 billion USD was invested in 117 deals. The investment value doubled, in comparison with the same period last year, with just a 4% increase in volume. In Q4 13, the total investment was 2.21 billion USD across 103 deals.

    Continuing the trend of last quarter, the IT & IT-enabled services (IT & ITeS) sector retained the top slot, attracting 2.56 billion USD in 59 deals, which is more than half of the total investments. It represents a 55% increase compared with the previous quarter and is nearly three times higher than the investment recorded in the same period last year.

    The banking and financial sectors (BFSIs) stellar performance during the fourth quarter has made it the second best attraction. With a total investment of 563 million USD, it recorded a two-fold jump from the previous quarter.

    Total equity investments

    Quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

    Number of deals

    19 23 21 38 44 42 46 62 100 87 106 99 118 95 139 178 165 108 136 87 73 48 69 102 95 84 122 104 121 131 145 125 132 120 131 108 107 124 113 103 144 112 117 107

    Data provided by Venture Intelligence.

    Late-stage investments outperformed growth-stage investments, receiving a total of 2.91 billion USD compared to the 934 million USD worth of investments in growth-stage deals.

    Mumbai made a comeback to the top slot with regard t0 PE investmentsboth by value and volume of dealsin this quarter with investments of 1.01 billion USD from 29 deals.

    464

    241

    247

    923

    576

    357727

    845

    1,371

    2,038

    1,776

    1,963

    2,768

    2,081

    4,378

    5,401

    3,815

    2,655 2,587

    1,197711

    807

    1,010

    1,582

    2,097

    2,044

    2,370

    1,952

    3,829

    2,704

    2,710

    1,652

    2,211

    2,049

    3,864

    1,229 1,177

    4,834

    1,528

    2,211

    2,410

    3,101

    2,815

    4,352

    0

    1,000

    2,000

    3,000

    4,000

    5,000

    6,000

    Value of deals (in US$ Mn)

    2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

  • PwC MoneyTreeTM India Report Q4 14 6

    Investments by industry Q4 13, Q3 14 and Q4 14

    The IT&ITeS sector attracted 2.56 billion USD in 59 deals, a 55% increase as compared to the previous quarter and almost three times higher than the investments in the same period last year.

    In Q3 14, the total investment was 1.65 billion USD across 65 deals while in Q4 13, it was 987 million USD from 48 deals.

    BFSI emerged second in terms of investment value with investments worth 563 million USD in 11 deals, a two-fold increase compared to the previous quarter. In Q3 14, the total deal value was 225 million USD across eight deals, while in Q4 13 it stood at 90 million USD in eight deals.

    The energy sector received investments valued at 481 million USD this quarter in just six deals, a 75% increase from the previous quarter (275 million USD from 11 deals) and a nine-fold increase from the same period last year (52 million USD from three deals).

    Both the gems and jewelry and food and beverages sectors sprung a few surprises in the last quarter with their healthy performance. These sectors received investments worth 213 million USD (two deals) and 117 million USD (three deals) respectively.

    While internal policy changes such as hikes in FDI in insurance will be one of the lodestones, the actual money on the table will depend on decisions emanating from global flows. Looking at the health of the banking sector, one can expect flows into BFSI in areas such as asset reconstruction companies, recapitalisation of banks and e-commerce where action is expected due to the payment banks ecosystem.

    Manoj Kashyap Financial Services Industry Leader, PwC India

    11The renewable energy segment continues to attract strong inward investment given the continuation of a positive policy and regulatory outlook. The central government intends to further boost prospects for renewable energy, especially in wind, solar and biomass segments, and we expect to see investments not just in power generation but also in their manufacturing facilities and in services. Further, the proposed amendments to the Electricity Act 2003, in particular, on open access and competition should draw more interest into power trading and power exchanges.

    Kameswara Rao Power & Mining Industry Leader, PwC India

    The last quarter of 2014 saw the highest investment (in terms of value) in the IT&ITeS space in the last decade. Within IT&ITeS, e-commerce investments had the highest contribution this quarter, led by marketplaces such as Flipkart and Snapdeal, and aided by niche companies such as OlaCabs and Housing.com. Year 2014 saw investments in the e-commerce sector, which is helping the industry to scale up. Leaders have started emerging in the various business models (marketplace, self-owned, private label and flash sales). In 2015, e-commerce will continue to see strong growth due to growing penetration beyond the metros, as well as the depth of number of products and services provided online. This is fuelled by improvements in 3G connectivity, improving last-mile delivery capabilities, mobile wallets, demographic dividend, etc. Furthermore, consolidation, which started in 2014, is expected to continue in 2015.

    Sandeep Ladda Technology Industry Leader, PwC India

  • PwC MoneyTreeTM India Report Q4 14 7

    The manufacturing sector continued to fall this quarter, with a mere 39 million USD investment in two deals. It dipped by 74% compared to the previous quarters 148 million USD investments.

    Investments by industry

    Data provided by Venture Intelligence.

    430

    95

    58

    0

    5

    39

    28

    8

    563

    88

    481

    2,557

    58

    181

    0

    51

    26

    148

    51

    0

    225

    146

    275

    1,654

    267

    51

    0

    48

    1

    29

    0

    0

    90

    686

    52

    987

    0 500 1,000 1,500 2,000 2,500 3,000

    Others

    Engineering & construction

    Fast-moving consumer goods (FMCG)

    Textiles & garments

    Education

    Manufacturing

    Shipping & logistics

    Travel & transport

    Banking, financial services & insurance

    Healthcare & life sciences

    Energy

    IT & ITeS

    Q4 2013

    Q3 2014

    Q4 2014

    Note: 'Others' include other services, Telecom, media & entertainment, hotels & resorts, sports & fitness, agri-business, food & beverages, mining & minerals, gems & jewelry and retail.

    Value of deals (in US$ Mn)

  • PwC MoneyTreeTM India Report Q4 14 8

    Investments by stage of development Q4 13, Q3 14 and Q4 14

    In Q4 14, late-stage investment took over as the preferred investment route from growth investment, with the former receiving two-third of the total investment (2.9 billion USD in 34 deals). Growth investment saw 934 million USD during this period, while the private investment in public equity (PIPE) deals attracted 279 million USD.

    Investments by stage of development

    Data provided by Venture Intelligence.

    0

    0

    114

    279

    934

    2,907

    118

    0

    0

    111

    229

    834

    1,551

    90

    150

    0

    97

    89

    430

    896

    548

    0 500 1,000 1,500 2,000 2,500 3,000

    Others

    Pre-IPO

    Early

    PIPE

    Growth

    Late

    Buyout

    Q4 2013

    Q3 2014

    Q4 2014

    Value of deals (in USD 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.

  • PwC MoneyTreeTM India Report Q4 14 9

    Investments by region Q4 13, Q3 14 and Q4 14

    Mumbai superseded both Bangalore and the National Capital Region (NCR) in terms of investment attraction during Q4 14, with 1.01 billion USD in 29 deals. The NCR received more than double of what it achieved in the previous quarter (957 million USD in 24 deals in Q4) while Bangalore slid to 879 million USD, down by 41% when compared to Q3s 1.5 billion USD investment.

    Interestingly, smaller cities such as Thrissur in Kerala and Jaipur in Rajasthan hogged the limelight with 200 million USD from one deal and 112 million USD from two deals, respectively.

    Investments by region

    Data provided by Venture Intelligence.

    577

    8

    286

    617

    17

    957

    879

    1,011

    298

    33

    15

    120

    0

    413

    1,501

    434

    146

    44

    304

    176

    43

    844

    280

    374

    0 400 800 1,200 1,600 2,000

    Others

    Pune

    Hyderabad

    Chennai

    Ahmedabad

    NCR

    Bangalore

    Mumbai

    Q4 2013

    Q3 2014

    Q4 2014

    Value of deals (in USD Mn)

    Note: The National Capital Region (NCR) includes Delhi, Gurgaon and Noida.

  • PwC MoneyTreeTM India Report Q4 14 10

    Top 20 PE deals Q4 14

    The top 20 deals comprised 78% of the total deal value in Q4 14. The top four deals constituted 48% of the total deal value. About 84% of the deals in this quarter are below the value of 50 million USD.

    Top 20 PE deals in Q4 2014

    Company Industry Investors Deal amount (in USD Mn)

    Flipkart IT & ITeS Tiger Global, Iconiq Capital, DST Global, Steadview, Qatar Investment Authority, Others

    700

    Snapdeal.com IT & ITeS SoftBank Corp 637 Olacabs IT & ITeS Tiger Global, Matrix Partners India, SoftBank Corp,

    Steadview 210

    Kalyan Jewellers Gems & Jewelry Warburg Pincus 200 Greenko Group Energy EIG Global Energy Partners 125 Janalakshmi Financial Services

    BFSI Morgan Stanley, Tata Capital, TPG Capital, GAWA Microfinance Fund, Others

    100

    Axis Bank BFSI IFC 100 Indian Energy Exchange Energy TVS Capital, Others 94 Housing.com IT & ITeS Helion Ventures, Nexus Ventures, Qualcomm

    Ventures, SoftBank Corp, DST Global, Falcon Edge Capital

    90

    Jaipur Mahua Tollways Engg. & construction I Squared Capital 85 Devyani International Food & beverages Temasek 82 Clearwater India BFSI IFC 75 Fullerton India BFSI IFC 75 Mytrah Energy Energy Merrill Lynch, Apollo Management 70 Servion Global Solutions IT & ITeS Everstone, Solmark 66 Zomato Media IT & ITeS Sequoia Capital India, Vy Capital, Others 60 Truecaller IT & ITeS Sequoia Capital India, Others 60 Green Infra Energy IFC 59 Financial Software & Systems

    IT & ITeS PremjiInvest 57

    Equitas Micro Finance India

    BFSI IFC, FMO, CDC Group, DEG, India Financial Inclusion Fund, Creation Investments

    53

    Data provided by Venture Intelligence.

  • PwC MoneyTreeTM India Report Q4 14 11

    3. Analysis of PE exits

    Total PE exits

    The declining exit activity has raised concerns for the upcoming quarters as the exit in Q4 14 plummeted 25% to 1.02 billion USD in 27 deals, as compared to the previous quarter which received 1.35 billion USD worth of exits in 40 deals. During the same period last year, the total exit value was 1.28 billion USD in 31 deals.

    The manufacturing sector dominated the exit space this quarter with four deals worth 410 million USD followed by the IT & ITeS sector (354 mllion USD in nine deals).

    Fifty percent of the total exits happened through public market deals valued at 506 million USD across 11 deals.

    Total private equity exits

    Quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

    Number of deals

    15 7 10 14 16 17 22 22 20 19 23 29 35 37 38 33 30 14 19 11 18 42 32 32 47 35 43 59 32 30 31 30 44 34 33 34 36 36 20 31 28 58 40 27

    Data provided by Venture Intelligence.

    158 246 273

    121

    1,169

    165

    2,001

    1,159

    482

    671 607

    928 801

    662

    1,514

    789 869

    276 209 268 283

    706 606

    368

    971 896

    1,227

    3,068

    776

    1,056

    800

    438

    1,320

    403

    1,4641,591

    1,124

    1,764

    522

    1,283

    418

    1,3711,350

    1,016

    0

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    3,500

    Value of deals (in US$ Mn)

    2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

  • PwC MoneyTreeTM India Report Q4 14 12

    Exits by industry Q4 13, Q3 14 and Q4 14

    With just four deals worth 410 million USD, the manufacturing sector led the exit activity with a 31% surge, compared to the previous quarters 314 million USD in four deals. During the same period last year, this sector witnessed exit deals worth 10 million USD.

    The IT&ITeS sector also fared well, with a seven-fold growth in its exit activity achieving 354 million USD compared to a mere 48 million USD in Q3 14. It was 408 million USD during the same period last year.

    BFSIs exit activity dropped to just 30 million USD this quarter as compared to 196 million USD in the previous quarter and 164 million USD in the previous year. The energy sector didnt see any exit activity this quarter.

    The shipping & logistics sector saw a single exit deal worth 100 million USD during this period.

    Exits by industry

    Data provided by Venture Intelligence.

    189

    30

    354

    0

    23

    410

    10

    550

    196

    48

    142

    51

    314

    49

    89

    164

    408

    2

    72

    10

    538

    0 100 200 300 400 500 600

    Others

    Banking, financial services& insurance

    IT & ITeS

    Energy

    Textiles & garments

    Manufacturing

    Healthcare & life sciences

    Q4 2013

    Q3 2014

    Q4 2014

    Note: Others include engineering & construction, shipping & logistics, telecom, fast moving consumer goods, energy, other services, retail, food & beverages and hotels & resorts.

    Value of deals (in USD Mn)

  • PwC MoneyTreeTM India Report Q4 14 13

    Exits by type Q4 13, Q3 14 and Q4 14

    Public market sales continued to be the preferred mode of exit, with more than 50% of the total exit value emerging from public deals (506 million USD in 11 deals). Secondary sales (282 million USD in five deals) rose above strategic sales (103 million USD in nine deals) during this period. Interestingly, this season witnessed buy-backs worth 125 million USD.

    .

    Exits by type

    Data provided by Venture Intelligence.

    125

    103

    0

    282

    506

    35.27

    142

    36

    90

    1,047

    90

    167

    0

    837

    190

    0 200 400 600 800 1,000 1,200

    Buyback

    Strategic sale

    IPO

    Secondary sale

    Public market sale

    Q4 2013

    Q3 2014

    Q4 2014

    Note: Definitions of the types of exit can be found in the definitions section of this report.

  • PwC MoneyTreeTM India Report Q4 14 14

    Top five PE exits Q4 14

    The top five exits comprised 60% of the total exit value in Q4 14.

    Top 5 PE exits in Q4 2014

    Company Industry Investors Deal amount (in USD Mn)

    Hero MotoCorp Manufacturing Bain Capital 399 JSW Infrastructure Shipping & logistics Eton Park 100 Justdial IT & ITeS SAIF 41 Newgen Imaging Systems IT & ITeS ePlanet Ventures, Franklin Templeton PE, Abraaj Group, 33 Nilgiri Dairy Farm Retail Actis, GIC 32

    Data provided by Venture Intelligence.

  • PwC MoneyTreeTM India Report Q4 14 15

    4. Active PE firms

    Based on the volume of deals, International Finance Corporation (IFC) has emerged as the most active investor for Q4 14.

    The most active PE investors in the last quarter of 2014 include the following:

    Most active PE investors in Q4 14

    Investors No of deals*

    Investors No of deals*

    IFC 9 IDG Ventures India 2

    Sequoia Capital India 8 India Quotient 2

    Blume Ventures 5 Innovations Investment Management 2

    Helion Ventures 5 Inventus Capital Partners 2

    SoftBank Corp 4 Matrix Partners India 2

    Tiger Global 4 NEA 2

    Accel India 3 OCP Asia 2

    Kalaari Capital 3 PremjiInvest 2

    Nexus Ventures 3 Ratan Tata 2

    SAIF 3 Steadview 2

    Bright Ventures 2 Tata Capital 2

    Canaan Partners 2 Temasek 2

    CDC Group 2 TPG Capital 2

    DST Global 2 Warburg Pincus 2

    ICICI Venture 2 YourNest 2

    Data provided by Venture Intelligence. * Number of deals includes both single and co-investments by PE firms. In cases where two or more firms have invested in a single deal, it is accounted as one deal for each of the firms.

  • PwC MoneyTreeTM India Report Q4 14 16

    5. Sector focus IT & ITeS sectorTotal PE investments

    The IT & ITeS sectors good show continued with over 59% of the total private equity invested in India, funding for the growth of companies in this sector. It registered an increase of 55% as compared to the previous quarter (2.56 billion in 59 deals) and attained a nearly three-fold increase as compared to the same period last year (987 million USD in 48 deals).

    The average deal size in this sector surged from 25.4 million USD in the previous quarter to 43.3 million USD this quarter. In Q4 13, this sectors average deal size was valued at 20.6 million USD.

    The average deal size in the early-stage investment climbed to 2.5 million USD this quarter.

    Value of private equity investments in the IT & ITeS sector

    Quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

    Number of deals

    8 10 8 8 12 11 10 16 28 18 34 23 34 35 35 31 31 30 49 27 20 15 20 21 26 15 36 24 39 45 43 40 44 47 57 41 42 42 41 48 63 47 65 59

    Data provided by Venture Intelligence.

    6299

    95

    538

    241

    49 55 84

    217

    850

    360

    181

    625 647

    308

    229

    559

    354

    447

    166121

    62

    389

    106

    266

    107 148

    311

    657

    344

    515

    341294 309

    2,407

    176 146

    480

    618

    987 968

    726

    1,654

    2,557

    0

    500

    1,000

    1,500

    2,000

    2,500

    3,000

    Value of deals (in US$ Mn)

    2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

  • Sector focus: IT & ITeS

    PwC MoneyTreeTM India Report Q4 14 17

    In the last decade, a comparison between quarter-on-quarter growth rates of the IT & ITeS PE investments against the total PE investments proved that funding for the sector outpaced the growth of total PE funding in most quarters. Notably in this quarter, the growth percentage of the total PE investment and investments in the IT & ITeS sector both equalled at 55%.

    Value of private equity investments in the IT & ITeS sector

    Data provided by Venture Intelligence

    -200%

    -100%

    0%

    100%

    200%

    300%

    400%

    500%

    600%

    700%

    800%

    Q1

    '04

    Q2

    '04

    Q3

    '04

    Q4

    '04

    Q1

    '05

    Q2

    '05

    Q3

    '05

    Q4

    '05

    Q1

    '06

    Q2

    '06

    Q3

    '06

    Q4

    '06

    Q1

    '07

    Q2

    '07

    Q3

    '07

    Q4

    '07

    Q1

    '08

    Q2

    '08

    Q3

    '08

    Q4

    '08

    Q1

    '09

    Q2

    '09

    Q3

    '09

    Q4

    '09

    Q1

    '10

    Q2

    '10

    Q3

    '10

    Q4

    '10

    Q1

    '11

    Q2

    '11

    Q3

    '11

    Q4

    '11

    Q1

    '12

    Q2

    '12

    Q3

    '12

    Q4

    '12

    Q1

    '13

    Q2

    '13

    Q3

    '13

    Q4

    '13

    Q1

    '14

    Q2

    '14

    Q3

    '14

    Q4

    '14

    IT and ITeS investments growth Total investments growth

  • Sector focus: IT & ITeS

    PwC MoneyTreeTM India Report Q4 14 18

    Investments by stage of development Q4 13, Q3 14 and Q4 14

    Late-stage investments outshined growth investments this quarter with 76% of the total invested money emerging in this mode. Late-stage investment was valued at 1.95 billion USD in 10 deals this quarter, an 83% increase as compared to the previous quarter (440 million USD growth investments in 12 deals).

    A total of 86 million USD was invested in 34 companies.

    IT & ITeS investments by stage of development

    Data provided by Venture Intelligence.

    0

    86

    53

    440

    1,945

    33

    0

    74

    0

    509

    1,065

    6

    0

    65

    5

    302

    66

    548

    0 500 1,000 1,500 2,000

    Pre-IPO

    Early

    PIPE

    Growth

    Late

    Buyout

    Value of deals (in US$ Mn)

    Q4 2013

    Q3 2014

    Q4 2014

  • Sector focus: IT & ITeS

    PwC MoneyTreeTM India Report Q4 14 19

    Investments by region Q4 13, Q3 14 and Q4 14

    Bangalore retained its prime position as the best IT & ITeS investment destination this quarter as well, with the NCR trailing by a narrow margin. Bangalore attracted 753 million USD, and slipped by 37% from the previous quarter, while the NCR grew five-fold to 752 million USD. Chennai (365 million USD) beat Mumbai (517 million USD) to secure the third spot this quarter.

    IT & ITeS investments by region

    Data provided by Venture Intelligence.

    112

    0

    8

    50

    517

    752

    753

    365

    62

    0

    28

    5

    5

    147

    1,188

    220

    33

    0

    25

    6

    25

    471

    225

    201

    0 200 400 600 800 1,000 1,200 1,400

    Others

    Kochi

    Pune

    Hyderabad

    Chennai

    NCR

    Bangalore

    MumbaiValue of deals (in US$ Mn)

    Q4 2013

    Q3 2014

    Q4 2014

  • Sector focus: IT & ITeS

    PwC MoneyTreeTM India Report Q4 14 20

    Investments by subsector Q4 13, Q3 14 and Q4 14

    The online services subsector received nearly 72% of the total deal value (1.84 billion USD in 30 deals) followed by BPO services (433 million USD in three deals). Online services registered a growth of 33% compared to the previous quarters 1.39 billion USD in 32 deals.

    IT & ITeS investments by subsector

    Data provided by Venture Intelligence.

    66

    0

    91

    51

    19

    58

    433

    1,840

    25

    7

    138

    81

    7

    6

    2

    1,388

    0

    0

    17

    99

    0

    568

    0

    303

    0 200 400 600 800 1000 1200 1400 1600 1800 2000

    Others

    Networkingtechnology

    Mobile services

    Enterprise software

    IT products

    IT services

    ITeSBPO

    Onlineservices

    Value of deals (in US$ Mn)

    Q4 2013

    Q3 2014

    Q4 2014

  • Sector focus: IT & ITeS

    PwC MoneyTreeTM India Report Q4 14 21

    PE exits in the sector Q4 13, Q3 14 and Q4 14

    The IT & ITeS sector recorded a robust exit activity with a seven-fold increase compared to the previous quarter. There were nine exits worth 354 million USD this quarter against just six exits valued at 48 million USD in Q3 14. But in comparison to Q4 13, it declined by 13% (408 million USD in six deals).

    About 79% of the exit happened through secondary sales during this quarter.

    Total private equity exists in the IT & ITeS sector

    Quarter Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

    Number of deals

    8 4 3 12 5 6 7 7 7 6 11 11 9 15 7 8 6 5 3 3 5 4 8 7 13 9 4 13 7 7 4 9 11 8 8 8 5 9 9 6 8 15 6 9

    Data provided by Venture Intelligence.

    93176

    2277

    2729

    679

    57

    316379

    81

    104 78

    259 287

    56 1866 12 12 32 25

    162

    47

    391

    152156

    1,719

    336

    604

    154 95129

    106

    1,056

    257225

    384

    275

    408

    181

    314

    48

    354

    0

    500

    1,000

    1,500

    2,000

    Value of deals (in US$ Mn)

    2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

  • PwC MoneyTreeTM India Report Q4 14 22

    6. 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 in the growth stage:

    Third or fourth round funding of institutional investments

    First or second round of institutional investments for companies that are more than five 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 for companies that are more than five years old and less than 10 years old or subsidiaries or spin-outs of larger businesses

    Fifth or sixth rounds of institutional investments

    Late stage: This comprises the following:

    Investment in companies that are a decade old

    Seventh or later rounds of institutional investments

    PIPEs: The following constitute as 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.

    Buyoutlarge: 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 the PE or VC investors equity stakes by either the investee company or its founders or promoters.

    Strategic sale: This includes the sale of the 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 the PE or VC investors equity stakes by another PE or VC investors constitutes secondary sale.

    Public market sale: This includes the sale of the 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.

  • PwC MoneyTreeTM India Report Q4 14

    PricewaterhouseCoopers and Venture Intelligence have taken responsible steps to ensure that the information contained in the MoneyTreeTM report has been obtained from reliable sources. However, neither of the parties can warrant the ultimate validity of the data obtained. Results are updated periodically. Therefore, all data is subject to change at any time. Before making any decision or taking any action, you should consult a competent professional adviser.

    2015 PwC. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity.

    Please see http://www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a

    substitute for consultation with professional advisors. MW-15-0805

    www.pwc.com/globalmoneytree www.pwc.in

    Contacts

    Sandeep Ladda Technology Industry Leader PwC India [email protected]

    Sanjeev Krishan Private Equity Industry Leader PwC India [email protected]

    This report was researched and written by the following:

    Pradyumna Sahu Director, Technology Industry PwC India [email protected]

    Sibi Sathyan Knowledge Manager, Private Equity Industry PwC India [email protected]

    About PwCs Technology Institute

    The Technology Institute is PwCs 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 experienced-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.

    About PwC

    PwC helps organisations and individuals create the value they are looking for. We are a network of firms in 157 countries with more than 195,000 people who are committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us www.pwc.com.

    www.pwc.com