Buoyed by Flipkart’s sale to Walmart, 2018 was a record year for exits with stake sales worth over $24 billion
With the Indian economy itself showing signs of a slowdown, private equity investors are expected to put their exit plans on hold
Private equity exits have slowed in India, with PE funds recording stake sales worth just $3.1 billion in the first half of the year, data from consulting firm PwC India showed.
Buoyed by Flipkart’s sale to Walmart, 2018 was a record year for exits with stake sales worth over $24 billion, the data showed. The Flipkart sale accounted for more than 60% of that.
According to Sanjeev Krishan, leader and partner, deals, PwC India, the slowdown in the IPO market contributed to the drop in private equity exits this year.
“Generally, the muted PE activity is attributed to the slowdown in the IPO market, which was a major contributor," he said.
Krishan added that while overall exits have witnessed a slowdown, exits in the venture capital space are expected to show good momentum.
“2018 broke all records for PE exit activity in India, surpassing 2017, which was the previous landmark year for exits by around 80% in terms of exit value. In comparison, 2019 has not been able to keep pace with the level of activity over the last two years, specifically on the private equity side—on the venture side, exit activity is expected to be a bit better owing to the secondary/tertiary trades as some of the early-stage companies mature."
With the Indian economy itself showing signs of a slowdown, private equity investors are expected to put their exit plans on hold or seek alternative exit options.
“A number of PE firms have temporarily shelved their exit plans while awaiting a revival of the public market in India. With liquidity concerns on the rise, we could expect investors to look at alternative routes and possibly move towards strategic or secondary sales to monetize their assets," said Krishan.
“For exits, timing is key and investors will either have to adopt a wait-and-watch approach or consider alternatives in this market—sectors such as infrastructure and renewables have seen platform plays which has released some capital for early investors, but the traditional sectors like consumer and FS (financial services) have seen some slow down in exit activity," he added.