$1.6 billion PE market exits in April

Chennai: Open market exits by private equity and venture capital funds saw a short recovery in April. After witnessing a decline of 70 per cent in 2018, open market exits topped as the most preferred mode in April.

In 2018, PE/VC exits at $26 billion had increased by almost 100 per cent compared to 2017. But due to volatility in stock markets, both open market exits and PE-backed IPOs recorded significant declines. Last year saw $1.7 billion in open market exits across 56 deals compared to similar exits worth $6.2 billion across 128 deals in 2017—more than 70 per cent drop in terms of value and over 56 per cent drop in terms of volume. Open market deals had accounted for 80 per cent of exit deal value in 2017 and this dropped to 6.5 per cent in 2018.

"Open Market exits declined in 2018 amidst volatility in the markets on the back of escalating trade tariffs-related tensions between the US and other countries as well as volatility in the domestic market due to headwinds on the macroeconomic front," said Vivek Soni, Partner and National Leader Private Equity Services, EY.

Similarly, 2018 recorded 11 PE-backed IPOs worth $760 million compared to 21 PE-backed IPOs worth $1.8 billion in 2017 - more than 50 per cent drop both in terms of value and volume.

This decline was, however, more than compensated by increase in strategic and secondary deals. Strategic exits worth $18.4 billion across 50 deals in 2018 were the highest in terms of value and more than 20 times the value recorded in 2017. This was mainly on account of the $16 billion Walmart-Flipkart deal.

However, in April this year, open market exits made a comeback by becoming the top mode of exit. In total, April recorded 16 exits worth $1.6 billion, which was better than March The improvement was primarily on account of a rebound in exits via Open Market at $715 million, which was the highest since November 2017. Among the key deals, KKR sold of its 0.54 per cent stake in HDFC for $270 million and GIC sold 3.8 per cent in DLF for $187 million.

PE/VC exits in April crossed $1 billion mark largely due to the relief rally seen in the stock markets. However, with the capital markets expected to face some strong headwinds in May... we are of the view that PE/VC exits via open market/ IPOs will see continued volatility till some of these uncertainties play out,' said Soni.

Exits via IPO have not yet made any revival even in April.