Private equity exits: 12 quick takeaways

Total exit value breached the $10 billion mark for the first time to touch $10.3 billion this calendar, from $9.4 billion in 2015, Ranju Sarkar/Business Standard reports from New Delhi.

Illustration: Uttam Ghosh/Rediff.com

Private equity (PE) firms in India returned more than $10 billion to their investors in exits in 2016, even as PE investments declined 30 per cent to $16 billion in 2016 till date, according to Bain & Co.

Here are 12 quick takeaways from the year-end update from Bain & Co:

1. Overall PE/VC investment deal value declined from $23 bn in 2015 to 1$6 bn in 2016 (down 30 per cent CAGR), number of deals declined from 1,049 to 965 (8 per cent CAGR) over the same period. However, deal value and volume remained higher than 2014 ($15 bn, 800 deals)

2. 80 per cent of decline in investment value came from consumer technology, real estate and BFSI sectors

3. Decline in consumer technology deals driven primarily by fewer and smaller deals in 2016 (54 per cent decrease in consumer tech deal value from 2015)

4. Large series funding (more than $500 mn) for Flipkart, Ola Cabs, Snapdeal, PayTm in 2015 which formed 4-5 largest deals

5. No more than 500 mn consumer tech deals in 2016 (only 2 deals more than $200 mn)

6. Steady increase in deals in IT/ITes, manufacturing and other sectors such as education and hospitality, contributing to 95 per cent of increase in deal value from 2015

7. Top 15 deals formed 31 per cent of total deal value vs 26 per cent in 2015

8. Top three deals include Mphasis (Blackstone), Resurgent Power (CDPQ, OSGRF, KIA) and GE Capital Services (AION, Others) forming 12 per cent of total deal value in 2016

9. Overall exit values increased from $9.4 bn in 2015 to 10.3 bn in 2016 (9 per cent CAGR), number of deals declined from 213 to 199 (down 7 per cent CAGR) over the same period

10. Increase in share of strategic sales and secondary sales as mode of exit (47 per cent in 2016 vs 31 per cent in 2015)

11. Top 10 exits form 48 per cent of total exits value

12. Top 3 exits include Alliance Tire (KKR), Chase Pharma (Cipla) and Bharti Telecom (Temasek) forming 18 per cent of total exit value in 2016

Total exit value breached the $10 billion mark for the first time to touch $10.3 billion this calendar, from $9.4 billion in 2015, helped by deals in the healthcare and manufacturing segments, which saw exits worth $2.2 billion and $2.3 billion respectively, said Bain & Co in a year-end update.

Strategic sales, secondary deals to other private equity managers and IPOs all remained robust exit routes during the year, though listings on the stock exchanges dried up towards the end of the year as public markets turned volatile.

KKR & Co alone harvested $1.7 billion in exits, selling Alliance Tires and Gland Pharma to Japan's Yokohama and Fosun of China, respectively.

Goldman Sachs sold its entire stake in Pune-based engineering and electrical fittings company Sigma Electric for $250 million, Temasek sold its stake in Bhati Airtel to SingTel for $657 million while venture capital firms such as Sequoia and Helion made their exits when microfinance company Equitas Holdings went public.

PE investments fell compared to last year's record high of about $23 billion, dragged down by sluggishness in consumer internet, BFSI (banking, financial services and insurance) and real estate sectors.

Investments in consumer internet firms like Flipkart and Ola, was down by $3.7 billion compared to last year as investors chose to focus on unit economics.