PE investments seen at record $20 bn this year

New Delhi: Private Equity players are seen sealing the year with record investments of nearly USD 20 billion in India as they opened their wallets to help fuel the startup eco-system.

An interesting trend in PE and Venture Capital investments this year was the involvement of high net worth individuals (HNIs) and industry leaders like Ratan Tata, Azim Premji and Narayana Murthy, which in turn provided increased profile to the startups especially among investor community.

The shortfall in M&A activity this year was made up by a significant increase in PE deals on booming investments in the e-commerce segment and supported by deals in real estate, technology and financial services sectors.

According to global consultancy EY, up till November this year there were PE investments worth USD 18 billion in over 700 transactions and this deal tally is expected to be close to USD 20 billion by the end of this year. There has been a 60 percent jump year-on-year in both investment value and deal volumes. Moreover, there has been a 2- fold jump in early stage deals, indicating a vibrant start-up ecosystem, experts said.

"Renewed interest in India was demonstrated by the fund raising success which was on an upswing with a number of Indian GPs raising their follow-on vehicles ? IVFA, Everstone, Multiples, Samara, Lighthouse, Westbridge etc. Total funds raised touched USD 6 bn which is the highest ever," EY Partner, Transactions and Private Equity Mayank Rastogi said.

Many Indians, who were traditionally fond of investing in stock market, art and gold are now shifting their focus to start-ups, experts said. There have been multiple instances of HNIs investing in mid stage companies.

"Number of family offices and HNIs are focusing on the space and so are the more successful startup entrepreneurs such as Snapdeal/ Flipkart promoters and senior corporate professionals (ex- Microsoft India CEO, PE fund managers in their individual capacities etc.)," EY's Rastogi said. Some recent examples are Chairman emeritus of Tata Sons Ratan Tata's investments in Snapdeal, PayTm and Ola Cabs, Russian entrepreneur Yuri Milner's in Flipkart and Ola cabs through his fund DST Global and Narayan Murthy's joint venture with Amazon (through Catamaran Investments).