In what could be considered as an excellent news coming in for the Indian startup industry, private equity/venture capital (PE/VC) investments in the ecosystem reached a whopping $8.7 billion in the September quarter, a figure which is significantly higher than what was recorded for the same period last year.

According to a report by research company Ernst and Young (EY), the sector saw its PE/VC investments for the quarter July-September increase from $3.1 billion in the same period last year to a record high $8.7 billion this year. The report highlighted that this sharp increase was largely courtesy the big-ticket transactions that took place over the said period.

In total, the ecosystem witnessed a total of nine $200-million-plus deals in the July-September 2017 quarter, with SoftBank’s $2.5 billion investment in Indian ecommerce giant Flipkart being the largest PE investment ever recorded in the Indian subcontinent.

In August, Flipkart raised the second portion of its Series J funding from SoftBank Group. The $2.5B investment by the Japanese telecom and internet giant was a part of its $93 billion Vision Tech Fund, which is considered as the world's biggest private equity fund.

The EY report further revealed that not only did PE/VC investments saw a sharp jump in the July-September quarter, but the period also saw record exits for PE players and the largest IPO exits ever recorded in the history of Indian startup ecosystem.

According to the report, exists registered on a year-on-year basis saw an increase of a staggering 128 per cent in value terms at $4.7 billion across 65 deals. The EY report noted that this number was largely driven by exits via open market, secondary sale and IPOs.

The quarter also recorded the largest IPO exits ever with Fairfax selling its 12 per cent stake in ICICI Lombard for a celebratory $558 million.

Speaking to PTI, Vivek Soni, partner and leader for PE Advisory, EY said, “India is clearly maturing as a PE market, with bigger and complex deals becoming more common. Greater numbers of large deals and buyouts support this thesis, and it is clearly visible in the third quarter 2017 investment numbers.”

Commenting on the increase in the number of IPO exits and exits of PE players, Soni added, "The good news is that there is a massive amount of dry powder available globally and most global funds are now keenly looking at India for investment opportunities. The compulsion of corporate India to deleverage by selling assets is expected to add momentum to the growth of buyout deals in India.”

In August, another EY report had highlighted PE/VC investments in the Indian subcontinent had reached a record USD 11.2 billion in the first half of this calendar year. This meant, the country witnessed a whopping 41 per cent increase over last year driven by some big ticket deals.

This development was first reported in Business Standard.

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