After a rough start to the year, India’s private equity (PE) space looks red hot again.
In the first six months of 2017, PE and Venture Capital (VC) investments in India exceeded $11.2 billion, compared to around $8 billion in the same period last year, a report by audit and consultancy firm EY shows. This marks the highest-ever level of investments in the first six months of a year by PE and VC firms in India.
Large deals in the April-June quarter have turned around a sluggish ecosystem in which PE investments slipped to a five-year low in the first three months of this year. In all, eight deals worth over $300 million each turned the tide. In 2016, there were only seven such deals in the entire year.
“India is clearly maturing as a PE market with bigger and more complex deals becoming more commonplace,” said Mayank Rastogi, partner at EY, who focuses on PE. “Greater numbers of-big-size deals and buyouts are both a testament to this and it is clearly visible in the first half 2017 investment numbers.”
The financial services sector has been the top beneficiary of PE funds, followed by technology, real estate, telecom, and e-commerce.
Meanwhile, exits have also improved, signalling that more investors have managed to get their money back. Exits grew by 53% to $4.8 billion in the first half of the year, compared to $3.1 billion in the corresponding period last year—the best half-yearly performance since 2009. The financial services sector topped the list here, too, followed by technology and life sciences.
“There have been several reforms in India, including the new taxation laws, reduced inflation, and a continued focus on investment growth. And that is making India attractive to investors,” Prashant Mehra, partner at accountancy and advisory firm Grant Thornton India, told Quartz. “Apart from this there is also consolidation happening in several industries and the PE funding is also being used by larger companies to drive acquisitions.”