For private equity (PE) investments in India, the year 2017 was a milestone clocking USD 21 bn, the highest yearly value, across 735 transactions. According to the sixth edition of Grant Thornton’s The Fourth Wheel 2018 report, the year recorded a 54 per cent jump in values over 2016, despite a 24 per cent decline in volumes. This indicates significant jump in average deal sizes.

The report focuses on PE/VC industry in India and has been produced in association with Indian Private Equity and Venture Capital Association (IVCA), an organisation that works towards promotion of PE/VC firms. It was released today at the IVCA Conclave 2018.

The report further reveals that 2017 saw six USD 500 mn plus investments compared to only three in 2016. It witnessed 25 investments valued between USD 100 mn and USD 400 mn compared to 19 in 2016, signaling the revival of big-ticket investments and larger stake acquisitions.

Releasing the report, Harish HV, Partner – India Leadership team, Grant Thornton India LLP, said, “On the reforms and regulatory front, 2017 was an action-packed year with various initiatives aimed at driving economic stability. We believe these efforts will boost long-term investors’ confidence and help in creating a platform for a new era of PE/VC activity in Indian corporate landscape, where they take larger roles, higher stakes and greater exposure in the long-run. I am hopeful that 2018 will surpass 2017 in terms of deal activity and overall investment sentiments. We are looking at a mega deal for a billion dollar plus management buyout (MBO) which could be a first in this market. This will set the stage for more such transactions in future.”

When it comes to trends in sector-wise PE investment, e-commerce witnessed the largest y-o-y jump over 2016, with USD 6 bn worth of investments from 33 deals, compared to USD 1 bn from 31 deals in the previous year. Apart from e-commerce, the other sectors which witnessed increased investments were start-ups, banking and financial services, real estate, and IT/ITeS. A common theme across investments since 2015 has been ‘technology as an enabler’. E-commerce, start-ups, IT/ITeS and a portion of BFSI, all of which are technology-driven, have contributed to over 80 per cent of deal volumes and 57 per cent of deal values since 2015.

“2017 witnessed a robust increase in deal value primarily on account of increased number of large deals and improved exit environment. Increase in interest shown by offshore investors contributed fairly well to the figures. Given the market dynamics, buyouts shall be the most preferred investment strategy this year, along with follow on investments,” said Gopal Srinivasan, Chairman, IVCA.

2017 also saw a surge in IPO activity with 37 issues aggregating over USD 10.7 bn, recording almost three times the IPO values of 2016 and most issues witnessing significant over subscriptions. As per the report, many of the successful IPOs during the year provided a smooth exit for PE funds which is further expected to accelerate PE investments this year. The top 4 IPOs, all in the insurance sector, accounted for 55 per cent of overall IPO equity raised.

 

Please click here to read the full report.