A recent report by Ernst and Young’s Private Equity Monthly Deal Tracker said private equity (PE) and venture capital (VC) deals fell by 54% to USD 2.8 billion in May, compared to the corresponding month of last year.
According to the report, investment size of more than USD 100 million fell to just five transactions in May. In comparison, there were 16 such deals aggregating USD 5.2 billion in the same month last year.
“Although deal momentum appears to have slowed down in May 2019, with a decisive electoral mandate behind us and a strong deal pipeline in place, we expect investment momentum to pick up in the coming months,” Vivek Soni, partner and national leader, private equity services, EY, told Mint.
About 40% of the total investments in May came from sovereign wealth funds such as GIC, and pension funds. According to the EY report investments in startups also nosedived to USD 622 million.
“May 2019 recorded some large investments in real assets by sovereign wealth funds and Canadian pension funds. We expect REITS and InvITs to be one of the preferred structures for raising capital by real asset owners/developers in 2019, with large PE funds, pension funds and sovereign wealth funds coming on board as anchor investors," Soni told Mint.
Half of the investment flow in May happened through buyouts constituting USD 1.4 billion — 17% more than the buyout deals in May last year. Besides buyouts, there was a significant decline in other types of deals, such as growth capital, which fell 82% to USD 394 million on a year-on-year basis.
Not just investments, but the exits also reduced in May which saw 11 exits—55% lower at USD 739 million—compared to May 2018. None of the exits recorded were done via open market or initial public offering. The exits, most of which were strategic deals amounted to USD 733 million.