PE/VC investments hit $35 billion in 2018: EY report

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Published: April 19, 2019 1:05:05 AM

Private equity/venture capital (PE/VC) investments in India reached an all-time high of $35.8 billion in 2018, witnessing an increase of 37% in value terms compared to the year before, according to a report by EY.

PE/VC investments hit billion in 2018 (Representational image)PE/VC investments hit billion in 2018 (Representational image)

Private equity/venture capital (PE/VC) investments in India reached an all-time high of $35.8 billion in 2018, witnessing an increase of 37% in value terms compared to the year before, according to a report by EY.

The year 2018 recorded 78 deals of value greater than $100 million, aggregating $26.2 billion and accounting for 73% of the total value of PE/VC investments.

“The record level of growth has been driven primarily by large-sized deals, both in case of investments as well as exits, including the very large and marquee acquisition of Flipkart by Walmart, which gave a $16-billion exit to early backers of Flipkart. From a sector perspective, all the major sectors recorded increase in value invested in 2018, compared to the previous year,” the report said.

Fund-raising by PE/VCs increased by nearly 40% to $8.1 billion in 2018 compared to $5.8 billion in 2017.

The first quarter of 2019 saw $11.4 billion of PE/VC investments that eclipsed the first quarter of 2018 by 37%. “The first quarter is now the best quarter ever for PE/VC investment activity, as it saw 26 deals with investment amounts greater than $100 million, as against 13 such deals in Q12018,” the report said.

At the same time, PE/VC exits in 2018 almost doubled in value to $26 billion, compared to the previous high recorded in 2017. Exits are at a new all-time high — double the value recorded in 2017 — on the back of strong performance in strategic and secondary exits despite sharp declines in open market and IPO exits.

Open market exits have declined sharply to less than a third of values recorded last year, both in terms of value and volume. As buyouts become more prevalent, strategic sale is emerging as a strong exit option with many global corporates looking to get a foothold in the Indian market and with record levels of dry powder, PE funds are keen to take up quality proven assets from early investors.

“PE/VC investments could significantly exceed the 2018 record highs with real estate and infrastructure asset classes contributing materially to this growth. Exits are expected to remain buoyant, backed by strong capital markets and good M&A interest from both domestic as well as overseas strategic investors. Unless a bout of global volatility or a sub-optimal outcome of the Indian general elections results in a fractured mandate and unsettles the domestic public and private markets, PE/VC-backed exits should have a good year in 2019,” the report said.

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