Indian internet companies have raised $5.5 billion in the first nine months of 2015, a jump of over 37% over the $4 billion mopped up in 2014, reports Neha Bothra in Mumbai, citing investment banking firm Jefferies. Industry estimates put private equity/venture capital investment at $11.8 billion in domestic companies in the first nine months of CY15,with around 50% deployed in the internet sector.
“If you look at the global economy, we are in an era of surplus money that is going into financial assets. Part of that is coming into India because the allocation to China is being readjusted, and investors had been off India for four-five years,” Akhil Awasthi, managing partner, Tata Capital Growth Fund, observed.
E-tailers like Paytm, Flipkart and Snapdeal have topped the list of fund-raisers, raising $1.2 billion, $700 million and $500 million, respectively, from investors including Alibaba, Tiger Global, DST Global, Falco Edge and Steadview Capital.
Gopal Jain, managing partner of Gaja Capital, says active global e-commerce investors, including hedge funds in the US and in the Chinese e-commerce space, are driving e-commerce valuations in India as well.
“It is a demand-supply situation, where a ton of money is chasing a few domestic e-commerce companies,” Jain said.
Sandeep Ladda, leader of technology practice at PricewaterhouseCoopers, said PE and VC interest around online hyperlocal and home services is building due to the exponential scope to scale up business in this area. “This rapidly growing convenience oriented segment is driven by India’s young population, and may outpace 56% CAGR in the next two to five years,” Ladda added.
Mukul Singhal, principal at SAIF Partners, said investors are bullish on companies that cater to local services and have a strong smartphone platform. “We are keen to invest in companies that provide a marketplace for commerce around the home and on-demand local services like interior designers, beauticians at home, wedding planners, for example,” Singhal told FE.