- India received US$48 billion in PE/VC investments in 2019, 28% higher than the previous high of 2018.
- 56% of all PE/VC investments made over the past decade were received in the last three years, aggregating ~US$111.7 billion.
- US$87.5 billion of these investments have been in the form of primary capital contributing towards job creation, capacity addition, investments into technology, infrastructure etc.
Mumbai, 18 February 2020: As per IVCA-EY’s latest report, the “PE/VC Agenda: India Trend Book”, the Indian PE/VC industry is beginning to show co-relation with the global PE/VC industry. With PE/VC investments at ~1.7% of GDP, India is at similar levels that China was last year. In 2019, India received PE/VC investments worth US$48 billion across 1,037 deals on the back of large investments in infrastructure. PE/VC investments have emerged as a major source of FDI in India over the past three years accounting for ~64% of total FDI received in last three financial years ending March 2020.
Vivek Soni, Partner and National Leader for Private Equity Services, says, “2019 has been the best year for PE/VC investments in India. Notwithstanding the slowdown in the economy PE/VC capital has continues to flow into India eclipsing the highs seen in 2017 and 2018. The last three years saw ~US$111.7 billion worth of long-term capital being invested into Indian companies, more than 80% of which was from foreign capital. PE/VC has emerged as the largest source of much needed FDI for India.
More than 3/4ths of this capital inflow in the last three years has contributed to fresh capital formation, making PE/VC investments an important pillar of the Indian economy, helping in creation of new jobs, enhanced capacities, new infrastructure, new business models, disruptive technologies etc.
With the compression in global yields and increase in emerging market allocation by large global LP’s and GP’s, the macro is in favour of India’s improving prominence as an attractive investment destination for private capital. With a continuation of Government focus towards providing a stable and reform-oriented policy and tax regime, we continue to have a positive outlook for the Indian PE/VC sector.”
After two consecutive record-setting years, Indian PE/VC investments have notched another new all-time high in 2019, crossing US$48 billion. Over the past three years, PE/VC investments in India have grown at a CAGR of 44%. Cumulative PE/VC investments received during this period are almost equal to the investments received in the preceding 10-year period between 2007 to 2016. To put the numbers in context, post the 2008 global financial crisis (GFC), India received PE/VC investments worth ~US$198 billion between 2009-2019, of which the last three years, from 2017 to 2019, have accounted for 56%.
Similarly, PE/VC exits too have had a good run over the past three years. In each of the last three years, PE/VC funds have clocked exits of over US$10 billion. From 2009 to 2019, Indian PE/VC exits aggregated ~US$82 billion, of which 63% were made in the last three years. Even after adjusting for the one-off Flipkart-Walmart deal which saw its early investors notch up a US$16 billion exit, exits over the last three years have accounted for 43% of the aggregate value of all PE/VC exits between 2009 to 2019.
PE/VC as a source of FDI in India
Over the past four to five years, PE/VC investments have emerged as an important source of capital for the Indian economy and are now almost equal to ~1.7% of the Indian GDP. This is the level China was at in 2018. As the Indian PE/VC industry moves towards global averages, it is mimicking some of the global trends, such as buyout gaining prominence, deals becoming larger and more complex, and large global LPs increasingly making direct investments. The contribution of PE/VC capital to the overall Indian economy has also increased significantly from levels of around 0.7% of GDP in 2016 to its current level of around 1.7%.
