In 2018, PE/VC investments reached US $1.4 trillion making it the best year since 2007 for the PE industry globally and substantial part of this growth is due to the rise of mega deals in Americas and Europe, said EY’s latest report, the annual PE/VC Trend Book.
The report added that the Indian PE/VC industry is beginning to show correlation with the global PE industry. It added that in India, the market has mimicked most of the global trends as deal values are touching record highs, mega deals have become more frequent and average deal size has increased with strategic sales becoming the biggest contributor to PE/VC backed exits.
India is one of the fastest growing economies and this coupled with reforms undertaken by the government has helped attract record levels of alternate investment capital into the country.
Vivek Soni, Partner and National Leader for Private Equity Services, says, “2018 has been one of the best years for PE/VC investments and exits, further improving on the record set in 2017. 2019 has also started on a strong note, with US$11.4 billion of PE/VC investments in Q1 eclipsing the previous Q1 high (2018) by 37%.. India now ranks amongst the most attractive emerging markets for GPs and this continued fondness for India by LPs, coupled with the record levels of dry powder raised/being raised globally, is very positive for the Indian PE/VC industry.”
Soni added that because of PE/VC GP’s continued ability to generate returns that are superior to public market returns, LPs are expected to continue allocating higher amounts of risk capital to the PE/VS asset class in the foreseeable future.
“We think this Golden Age of PE/VC will continue for some time globally and at EY India, we believe that India is well positioned to attract a disproportionately higher share of this mountain of global private capital looking for alpha returns. Political and policy stability permitting, by 2025, annual Indian PE/VC investment levels could potentially cross the threshold of US$65 billion,” he said.
2018 was a record year for PE/VC investments in India, recording a new all-time high of US$35.8 billion, in value terms, investments rose by 37% compared to 2017.
Deals are becoming larger and more complex. 2018 recorded 78 deals of value greater than US$100 million, aggregating US$26.2 billion and accounting for 73% of the total value of PE/VC investments.