Large deals push private equity, venture capital investment up 35% to $35.1 billion in 2018

Private equity (PE) and venture capital (VC) investments in the country grew 35 percent to USD 35.1 billion in 2018 compared with USD 26.1 billion in 2017, as per a report.

The growth in investments was driven by significant growth in large deals.

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

“2018 has been the best year for PE/VC investments and exits. As forecasted by us at 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, stated in a report.

By 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.

In 2018, 12 deals of value USD 500 million or greater, including eight USD 1 billion-plus deal.

During the year, deal volume increased by 28 percent to 761 deals compared to 594 deals in 2017.

“The growth was led by a strong pickup in buyouts and startup investments,” the source said.

The year shows 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 more than USD 100 million in 2018, aggregating to USD 25.9 billion and accounting for 74 percent of total PE/VC investments made in 2018 compared to 54 deals, aggregating USD 18.7 billion, of value greater than USD 100 million in 2017.

The biggest deal during the year saw GIC, KKR, PremjiInvest, and OMERS invest USD 1.7 billion in HDFC Limited for a 3 percent stake.

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

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

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

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

The year 2018 experienced USD 8.1 billion being raised across 51 fundraises by PE/VC funds, a 40 percent increase over 2017 and the highest ever, the report said.


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