Private equity or venture capital (PE/VC) investments so far in 2018 aggregate to $25.2 billion, which is just under $1 billion short of last year’s record, a report by EY said.
At $24 billion, PE/VC exits since the beginning of the year closely match the value of investments in 2018, a significant deviation from previous years where exits were generally lower than investments by over 50%. Large deals in both investments and exits have contributed to the strong performance.
After a weak third quarter, October recorded $3.1 billion in PE/VC investments, 50% higher compared with last year on the back of six large deals — deals of value greater than $100 million— accounting for 78% of investments during the month.
The largest deal during the month saw Warburg Pincus, Temasek, SoftBank and a few other investors investing $1.3 billion in the Africa business of Bharti Airtel for a 28.4% stake, the report said.
“The other large deals include Xander’s $350-million buyout of Phoenix’s Hyderabad office project and Advent’s $326 million buyout of Manjushree Technopack. With these investments, the total PE/VC investments in 2018 till date amount to $25.2 billion, just under a billion dollars shy of surpassing the previous year’s record,” the report stated.
Exits in October 2018, at $1.4 billion are over twice the value recorded in October 2017, mainly on account of the large $1-billion Blackstone-Intelenet Global deal. This follows the weak performance in September, which recorded just $29 million in exits apart from the large $16-billion Walmart-Flipkart deal. Exits in 2018 till date aggregate $24 billion, almost on a par with the value of investments year-to-date.
Vivek Soni, partner and national leader (private equity services) EY, said 2018 is also expected to become an inflection point for the Indian PE/VC industry as PE/VC exits come close to the value of PE/VC investments. “Though this has largely been aided by the large Walmart-Flipkart deal, it nonetheless marks a significant shift in the evolution of the Indian PE/VC industry and is expected to boost LP confidence for the Indian PE/VC ecosystem,” he said.
October 2018 saw $641 million in fund-raises, compared with just $31 million in October 2017, and more than twice the amount raised in September 2018.