The information technology and IT-enabled services (IT & ITeS) sector garnered the largest number of PE deals but also saw the largest number of exits by investors in the first quarter of 2012.
According to a PwC India report based on data provided by Venture Intelligence, the IT & ITeS sector witnessed 35 deals totalling $263 million. While this represented a 13 per cent growth in value terms, there was an eight per cent decline in the volume of deals when compared with the fourth quarter of 2011.
When it came to exiting ventures, the IT & ITeS sector saw eight exits, the highest when compared to other industries such as BFSI or health and lifesciences, in this quarter. Out of the total eight exits in this sector, three were through strategic sale, said the report.
Mr Hari Rajagopalachari, Leader – Technology sector, PwC India, said: “This indicates that the sector is going through a phase of consolidation where financiers and analysts believe that small players will merge or collaborate to attain a critical mass to be able to compete for large deals.”
The report goes on to add that, these exits have been from Tier II and III companies through strategic sales, thereby pointing to a trend of inability to compete with the big boys. “In the current economic scenario, size and scale of a company plays a critical role when competing for large deals,” said Mr Rajagopalachari.
In March, Nirvana Venture Advisors which acquired a 10 per cent stake in online games company, Games2win by providing partial exits to early shareholders Nexus India, ICICI Venture and some senior employees of Games2win.