Private equity and venture capital investments in India in May rose to a 10-year high of $3.1 billion, mainly driven by the Japanese major Softbank’s $1.4 billion investment in the mobile wallet company Paytm, audit and consulting firm EY said on Tuesday. PE/VC investments in May also crossed the $2 billion mark for the third consecutive month, the firm said in a statement.
The rising PE/VC investment showed the maturity of the market and widening of available resource pool for entrepreneurs to raise funds, EY said. “Indian PE/VC market has significantly matured over time. Five to seven years ago, the classic growth capital was the only meaningful capital pool available,” Mayank Rastogi, Partner and Leader for PE, EY, said in the statement, adding that now, a variety of options are available that address specific needs.
“There are variety of capital pools now available ranging from angel/VC to buyout funds, family offices, pensions and sovereigns, corporate funds, debt funds, sector focused funds providing solutions that address specific needs – this is one of the key drivers for continuing buoyancy in PE/VC investments in India despite slow growth capital investing,” Rastogi said. The USD 1.4 billion investment in Paytm by Softbank, was the top deal during May and accounted for 46 per cent of aggregate deal value.
Meanwhile, Canadian pension funds further added to their India investments with CPPIB investing USD 500 million in Indospace for a majority stake, thus taking the investments by Canadian pension funds in 2017 close to USD 2 billion. There were five deals of more than USD 100 million aggregating to USD 2.3 billion, accounting for 75 per cent of the aggregate deal value in May 2017.
From a sector perspective, Financial Services (USD 1.6 billion across 11 deals) emerged as the most active sector on account of the Paytm-Softbank deal, the largest deal in the financial services sector till date, EY said. Financial services was followed by real estate (USD 709 million across 4 deals) and ecommerce (USD 211 million across 6 deals) in terms of activity, it added.