The year 2017 has been the best for both investments and exits in India, surpassing respective previous highs.
The private equity and venture capital investments in 2017 recorded $26.8 billion across 589 deals, a 37% increase compared with the previous record achieved in 2015, according to accounting and professional services firm EY’s private equity deal tracker. It said that the year saw 257 exits worth $13 billion, almost double the previous high recorded in 2016.
“2017 was a watershed year for the Indian PE and VC sector,” said Vivek Soni, partner and leader for PE Advisory, EY, in a statement. “Investments grew significantly [65% increase year-on-year] to a record high.”
Apart from some unforeseen global macroeconomic risks in 2018, the Indian PE/VC sector is likely to continue to see growth in investments as well as exits, he said. The capital markets are expected to stay buoyant and initial public offerings should continue to be a compelling exit story for most of the year.
“While the fundamentals look strong, we also do need to be cautious of global events like the situation in Korea, the spike in crude oil prices etc,” he said.He said this could possibly adversely impact investor sentiment and the Indian macro story.
Sharp rise
PE and VC investments in India in 2017 witnessed a sharp increase in value on account of some very large deals (19 deals) with each of them in excess of $300 million including four deals of over $1 billion, according to EY.
Growth, start-up and PIPE (private investment in public equity) deals witnessed a multifold increase in investment flow in 2017 compared with the previous year.
Growth deals stood at $13.8 billion (2.4 times the value recorded in 2016). This was primarily driven by four mega deals accounting for 46% of the value of growth deals; three involving Softbank’s investments in the Indian e-commerce and fintech space and another by GIC in DLF.
Start-up and early-stage investments at $3.5 billion across 311 deals recorded a 1.7 time increase in deal value compared with 2016 and PIPE deals at $3.7 billion across 38 deals, recorded a 2.4 times increase in deal value over the same period.
In terms of sectors, e-commerce on the back of mega investments by Softbank ($4.8 billion across 63 deals), financial services ($7.1 billion across 103 deals), and real estate ($4.8 billion across 50 deals) were leading in terms of investment value in 2017. Technology was the top sector with 125 deals in terms of volume.
EY said 2017 was the best ever for exits in both value and volume. The aggregate deal value for PE exits in the year at $13 billion was almost twice that of the previous high of $6.7 billion seen in 2016.
But strategic exits recorded a significant decline with $881 million reported across 42 deals in 2017 compared with $2.7 billion registered across 55 deals in 2016.
