The booming startup-ecosystem and rising e-commerce sector in India helped the country to record more than $9.5 billion, or over Rs 60,000 crore, in 650 private equity (PE) and venture capital investment deals in just first half of 2015, said a data report by Bain & Company, a global consulting firm.
In PE deals, Indian companies grabbed 65% of total volume recorded in whole of last year within just first six months of current financial year. Last year there were 795 deals worth $15.2 billion.
Moreover, if the current pace of deals keep on continue in India, the total PE deals this year will surpass the record $17.1 billion at current exchange rate.
Following the trends from last year, e-commerce sector continues to be top choice of investors where it attracted around 44% of total deals.
The largest PE & venture capital deals India seen in this year are mostly in startups like One97 communications, parent company behind mobile wallet app PayTM, with massive $635 million dollars from group of foreign investors which includes Chinese e-commerce giant Alibaba. Another top deal made early this year was young online cab hailing startup Olacabs’ $400 million fund raise.
Notably, only 40% of the total PE deals made in first half of 2015 were fresh deals as all other deals been secondary deals which means the deals where one PE fund buys out from others. And because of these secondary deals only, investors who entered the Indian market in 2007-08 at sky-high valuations managed to exit from many of their past investments.
The sudden splurge in PE deals this year is due to the higher number of secondary transactions which is because of the fact that the funds that were raised in 2006-07 are maturing in 2015 and they will have to return capital to their investments which left companies with no choice but to indulge in secondary deals.
Experts says that lack of a buoyant IPO market has left the PE funds with few options for exits and secondaries deals will continue to be a preferred option for some time now.