PEs pull out record $10 billion after solid show in 2015

Global private equity (PE) players made good a sudden jump in valuation of their investments in 2016 and chose to pull out a record $10.3 billion from domestic markets.

The value of PE investment was stagnant, or even in some cases declined, over the past one decade.

This time, they mostly shied away from pumping in more dollars after their investment in a slew of start-ups hit an all-time high in 2015. It translated into a 30 % decline at $ 16 billion in 2016, down from $23 billion in 2015.

The total PE exits rose 1 % to $ 10.3 billion, from $ 9.4 billion in 2015. This is the highest-ever pullout from the country, according to brokerage house Bain and Co. Deal-wise, the figure slipped to 199, from 213, down 7 %, and the top 10 formed 48 % of the total exit value.

PEs fell back on a variety of models to exit, including strategic sales, secondary deals and initial public offerings. The first two accounted for as much as 47 % in 2016, up from 31 % in 2015, according to the brokerage data.

"Total exit value crossed $ 10 billion mark for the first time at $ 10.3 billion in 2016, up from $ 9.4 billion in 2015, boosted by deals in healthcare and manufacturing sectors, which alone saw as much as $ 2.2 billion and $ 2.3 billion, respectively, worth of exits," Bain and Co said.

In contrast, in 2015, these two sectors saw exits worth only $ 1 billion and $ 900 million, respectively.

The brokerage said listings on the stock exchanges dried up towards the end of the year.

Even so, 2016 was the best year for IPOs after 2010, netting Rs 26,473 crore in fresh capital from the primary market.

Leading American player KKR alone netted $ 1.7 billion by selling holding in companies such as Alliance Tires and Gland Pharma to the Japanese Yokohama and the Chinese Fosun, respectively.

Other major exits included Cipla's 16.7 % stake sale in the US-based clinical-stage bio pharmaceutical company Chase Pharma to drugmaker Allergan for $ 1 billion.

These three deals constituted 18 % of the total exit value in the year.