Large deals push PE, VC investment up 35% to $ 35.1 bn in ’18

MUMBAI: Private equity (PE) and venture capital (VC) investments in the country grew 35 per cent to $35.1 billion in 2018 compared with $26.1 billion in 2017, according to a report.

The increase in investments were driven by significant growth in large deals.

PE/VC exits recorded $26 billion in value, almost equal to the value of exits in the previous three years combined.

"2018 has been the best year for PE/VC investments and exits. As forecasted by us in the beginning of the year, both PE/VC investments as well as exits have touched a new record high in 2018," EY'S partner and national leader (private equity services), Vivek Soni, said in a report.

Though volatility in broader markets dampened pipe investments in the second half of 2018, this was more than adequately compensated by an uptick in buyout and start-up activity, he said.

During 2018, 12 deals of value $500 million or greater, including eight $1 billion plus deals.

In the year, deal volume increased by 28 per cent to 761 deals compared to 594 deals in 2017.

"The growth was led by strong pickup in buyouts and startup investments," the study said. The year recorded a strong uptick in startup investments on the back of some mega deals that saw large venture capital investors like Softbank, Tencent and Naspers deploy significant amounts of capital.

There were 76 deals of value greater than $100 million in 2018, aggregating to $25.9 billion and accounting for 74 per cent of total PE/VC investments made in 2018 compared to 54 deals, aggregating $18.7 billion, of value greater than $100 million in 2017.

The largest deal during the year saw GIC, KKR, Premjiinvest and OMERS invest $1.7 billion in HDFC Limited for a 3 per cent stake.

In 2018, PE/VC exits, at $26 billion, increased by almost 100 per cent compared to 2017 and are almost equal to the value of exits in the previous three years combined, the report showed.

The sharp rise was mainly on account of a single large deal that saw Walmart acquire controlling stake in Flipkart for $16 billion from a clutch of investors including Softbank, Tiger Global and others.

This is the largest deal in the Indian PE/VC market ever, it said.

From a sector perspective, e-commerce ($16.4 billion across 10 exits), technology ($1.8 billion across 24 exits), financial services ($1.5 billion across 34 exits) were the top sectors for PE/VC exits in 2018.

The year 2018 saw $8.1 billion being raised across 51 fund raises by PE/VC funds, a 40 per cent increase over 2017 and the highest ever, the report said.