After witnessing a robust inflow of private equity (PE) in 2018 with a total investment of about $26.3 billion from 793 deals, Indian market saw 265 exits worth $33 billion this year.
According to Bain & Company’s recent report, one mechanism to check investors’ confidence is through exit momentum. On the basis of this parameter, Indian PE market performed very well in 2019, with the highest exit values in the last decade. This was led by the $16 billion Flipkart sale to Walmart, but the exit momentum was higher even excluding this high-value deal, the report said.
Primary reasons for the big exits were management issues and macroeconomic headwinds. Keen buyers and strong management teams stood as the major contributors to successful exits. The only concern that remained was rising valuations and high-interest rates that continued to be the pain point for most investors, domestic as well as foreign, the report added.
The consulting firm said that India’s economy will remain poised for growth in the coming year, and with capital markets on an upswing, many more exits were expected during the next few months.
In terms of investment in India, 2018 remained a hotbed for dealmaking.
During that year, total investment stood at $26.3 billion from nearly 793 deals. Most of the deals came in through consumer tech and IT that have been relatively attractive sectors for the funds and have demonstrated the highest potential over the last five-to-six years.
The report also added that the top 15 deals constituted about 40 percent of the total deal value. Over the next few years, investors have seen attractive opportunities in financial services and consumer/retail, even though valuations were perceived to be high. Interest was also strong in healthcare and technology, it said.
Going forward, cost improvement and capital efficiency will become even more important driver of returns, the report added.
First Published: IST