The year 2017 has been the best for both investments and exits in India, surpassing their respective previous highs, according to Ernst and Young's (EY’s) private equity deal tracker. PE/VC investments in 2017 were recorded at $26.8 billion across 589 deals, a 37 per cent increase compared to the previous record achieved in 2015. The year 2017 reported 257 exits worth $13 billion, almost double the previous high recorded in 2016.

Vivek Soni, Partner and Leader for PE Advisory, EY in a statement said, “2017 was a watershed year for the Indian PE/ VC sector. Investments grew significantly (65 per cent increase y-o-y) to a record high. Deals became larger and more complex and growth capital deals accounted for the highest activity and investment. It was also a great year for exits, which were almost 2x the previous high of 2016.”

“Apart from some unforeseen global macroeconomic risks in 2018, the Indian PE/VC sector is likely to continue to see a growth in investments as well as exits. Capital markets are expected to stay buoyant and IPOs should continue to be a compelling exit story for most of the year,” he said.

PE/ VC investments in India in 2017 witnessed a sharp increase in value on account of some large deals (19 deals) with each of them in excess of $300 million, including four deals of over $1 billion. In 2017, investments increased by 65 per cent in value terms compared to 2016 ($26.8 billion versus $16.2 billion in 2016) with deal volume remaining at similar levels (589 deals compared to 588 deals in 2016).

Growth, startup and PIPE deals witnessed a multifold increase in investment flow in 2017 compared to the last year. The year 2017 was the best year for growth deals at $13.8 billion (2.4 times the value recorded in 2016). This was primarily driven by four mega deals accounting for 46 per cent of the value of growth deals, three involving Softbank’s investments in the Indian e-commerce and fintech space and another involving GIC’s investment in DLF.

The start-up/early-stage investments at $3.5 billion across 311 deals recorded a 1.7 times increase in deal value compared to 2016 and PIPE deals at $3.7 billion across 38 deals, recorded a 2.4 times increase in deal value over the same period. In terms of sectors, e-commerce on the back of mega investments by Softbank ($4.8 billion across 63 deals), financial services ($7.1 billion across 103 deals), and real estate ($4.8 billion across 50 deals) were leading in terms of investment value in 2017. Technology was the top sector with 125 deals in terms of volume.

The year 2017 was the best year for exits in terms of both value and volume. The aggregate deal value for PE exits in 2017 at $13 billion is almost twice that of the previous high of $6.7 billion achieved in 2016. The sharp rise was driven by a 3.7 fold increase in open market exits compared to 2016 ($6.2 billion vs $1.7 billion in 2016), on the back of buoyant capital markets. Similar increase was seen in PE-backed IPOs ($1.8 billion vs $913 million in 2016). 2017 saw one of the biggest exits via an IPO by a PE fund, that of Fairfax’s $558 million exit from ICICI Lombard.

Strategic exits, on the other hand, recorded a significant decline with $881 million recorded across 42 deals in 2017 compared to $2.7 billion recorded across 55 deals in 2016. Financial services were witness to $3.9 billion across 51 exits, telecom ($1.9 billion across 3 exits), e-commerce ($1 billion across 8 exits) and technology $1.5 billion across 24 exits) were the top sectors for PE exits in 2017.

Fund raise

The year 2017 saw $4.9 billion in fund raise, 15 per cent higher than the levels seen in 2016. Kedaara’s $750 million and Chrys Capital’s $600 million sector agnostic fund raises were the largest in 2017. New fund raise plans announced declined by 43 per cent to $12.2 billion in 2017 compared to 2016, which had seen large announcements made by the Centre.