2018 was the best year for PE/VC exits in India: Report

Mumbai: 2018 was a record year for exits, auditing and consulting firm EY said on Monday, with private equity (PE) and venture capital (VC) exits reaching $26 billion, nearly doubling from the year before, and almost equal to the value of exits in the previous three years combined.

The sharp rise, however, was mainly due to the mega deal of Walmart buying a controlling stake in Flipkart for $16 billion from a clutch of investors, including SoftBank Group Corp. and Tiger Global, among others. It was the largest-ever deal in the Indian PE/VC market, EY said in a report.

Both open market exits and PE-backed IPOs saw significant declines due to volatile stock markets. Last year recorded $1.7 billion in open market exits across 56 deals, compared with 2017 when open market exits totalled $6.2 billion across 128 deals--a more than 70% decline by value and over 56% drop by volume.

The year also saw fewer PE-backed IPOs. 2018 recorded 11 PE-backed IPOs worth $760 million against 21 PE-backed IPOs worth $1.8 billion in 2018, a 50% fall in terms of both value and volume.

The decline was, however, more than compensated by higher strategic and secondary deals. “Strategic exits ($18.4 billion across 50 deals in 2018) were the highest in terms of value, more than 20 times the value recorded in 2017, mainly on account of the $16 billion Walmart-Flipkart deal. Even after adjusting for the Walmart-Flipkart deal, at $2.4 billion, strategic exits in 2018 are almost 3 times that of 2017 ($881 million across 42 deals in 2017). Similarly, secondary exits ($4 billion across 41 deals in 2018) recorded a growth of 21% in 2018 compared to 2017,” EY said.

PE/VC investments, too, had a record year in 2018 touching an all-time high of $35.1 billion. Investments during the year surpassed the previous record of $26.1 billion in 2017 by 35%, owing to significant growth in large-size deals. 2018 recorded eight deals of over $1 billion each, compared to 11 such deals in the preceding 12 years combined.

The largest deal during the year saw Singapore’s sovereign fund GIC, private equity giant KKR, PremjiInvest and Canadian pension fund OMERS investing $1.7 billion in HDFC Ltd for a 3% stake.