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IT sector sees highest ever PE deals in 2014

India’s technology sector saw the highest ever deal activity in 2014, driven by private-equity investments in the ecommerce sector. More than 400 deals worth $11.5 billion (Rs 72,910 crore) were announced in the sector in the past year, according to Grant Thornton-IVCA Technology Dealtracker.

“The trend has continued into 2015 also, with large IT and BPO players looking at cross-border acquisitions to consolidate service offerings and expand geographic coverage,” it said in a news release.

Ecommerce accounted for three quarters of the total value of deals in the technology sector, up from 30% two years earlier. “While all sub segments within ecommerce have garnered investor interest in terms of number of deals, e-tailers, such as Flipkart and Snapdeal, with their multiple products and brands, have driven big-ticker investments constituting 68% of the total deal value in 2014,” it said.

“India, from being merely a technology adapter or importer, is now becoming a creator for technology-enabled disruptive solutions. There is a clear desire and confidence that Indians can create unique solutions for the local market and also compete actively in the global market,” said Harish HV, partner at Grant Thornton India LLP.

“The presence of a complete lifecycle of investors from angel, to seed to VC to PE to public has no doubt contributed to this trend and we can safely say that the ecosystem for a startup is in place and that combined with entrepreneurship has resulted in an explosive growth of startups and deal activity,” he said.

Despite some big-ticket eye-popping deals, around 80% of private-equity investments were of less than $10 million. “With a stabilising capital market, stable government and hopes of new reforms, we expect heightened interest from global investors in the Indian economy in the coming year,” said Arvind Mathur, president of the Indian Private Equity & Venture Capital Association.

The article appeared in the Economic Times. The article can be found here.