The investments by private equity players/venture capitalists are expected to cross the $65 billion mark by 2025, says a report.
The country has received $35.8 billion in PE/VC investments in 2018, 37% higher than the previous high of $26.1 billion in 2017, according to the data collated by advisory firm EY Thursday.
However, PE/VC exits almost doubled in value to $26 billion in 2018 compared to the previous high of $13 billion in 2017.
"While the GDP has grown at 7.7% during the five fiscal 2018, PE/VC investments have grown at an annual rate of 25.23% during this period, indicating that PE as an asset class does better in larger economies.
As the economy grows, the PE/VC ecosystem is expected to grow faster. "By our estimates, there is a good chance that annual PE/VC investments can exceed $65 billion by 2025," the report said.
"Deals are becoming larger and more complex. The year 2018 recorded 78 deals of value greater than $100 million, aggregating $26.2 billion and accounting for 73% of the total value of PE/VC investments," it said.
"India remains one of the fastest growing large economies and this coupled with reforms undertaken by the government has helped attract record levels of alternate investments into the country," the report said.
The report further said 2018 recorded a strong uptick in startup investments on the back of some mega deals and was the best year for the sector, surpassing the previous high of $4.8 billion in 2015.
"Credit investments have emerged as a viable asset class for PE/VC funds to invest in India. Stressed loans in the banking system are at an all-time high, prompting regulatory and structural changes, providing an opportunity to PE funds to look at distressed debt as part of their credit strategy," the report noted.
Meanwhile, according to EY, buy-outs are expected to be one of the major trends of the domestic PE/VC sector in the years to come. "In 2018, there were 49 buy-outs worth $9.9 billion, surpassing all the previous highs and almost equal to the value of buy-outs in the previous three years combined," the report said.
It noted that with large LPs (limited partners) investing directly, private investments into public equity have witnessed strong growth touching $3.7 billion in investments in 2018, down a tad from $3.8 billion in 2017.
The report also notes notwithstanding the dip in deal activity in the second half of 2018 following the liquidity issues faced by NBFCs, financial services continued to be the top sector getting $7.9 billion in PE/VC finds across 144 deals, a growth of 12.8% over 2017.