Illustration by Binay Sinha
Private Equity (PE) investments in India rose to their highest in 2018, exceeding $33.1 billion across 720 transactions.
While PE investments during the year had surpassed the previous high of $24.3 billion across 734 deals — achieved in 2017 — in the first nine months of itself, the mega-investments seen in consumer internet & mobile startups like Swiggy and Byjus’s towards the end of the year helped the 2018 total jump by 36 per cent on a year-on-year basis. These figures include venture capital investments, but exclude PE investments in real estate.
According to data from Venture Intelligence, the year 2018 saw 81 PE investments that were worth $100 million or more apiece — accounting for 77 per cent of the total investment value during the period — compared with 47 such transactions in 2017.
Of the 81 $100-million-plus deals, 40 were larger than $200 million each — by themselves accounting for 60 per cent of the total value — compared with 30 such investments the previous year.
Led by the $1-billion investments in Swiggy (by South Africa-based Naspers and others) and Oyo (led by SoftBank), IT & ITeS companies accounted for 32 per cent of the total PE investment in 2018, with a total value of $10.6 billion across 383 deals.
Food delivery app maker Swiggy, which had started the year with a $100-million investment led by Naspers, followed up with a mid-year $210-million fundraising (led by Naspers and DST Global), and ended the year with a $1-billion investment (led by Naspers and Tencent). Hotel chain Oyo raised $800 million (with an additional commitment for $200 million) led by SoftBank Vision Fund. Paytm raised $445 million (from SoftBank and Alibaba for its e-commerce business Paytm Mall) and $356 million from Berkshire Hathaway at the level of the parent company (One 97 Communications).
Other large-ticket IT & ITeS investments in 2018 included the $300 million raised by online payment gateway service BillDesk from Temasek and others; the $236 million by online insurance broker PolicyBazaar (led by SoftBank) and the $410 million (across two rounds) raised by Swiggy competitor Zomato.
Other tech companies that were part of fundraising rounds worth $100 million or more during the year included payments enabler Pine Labs, event ticketing service BookMyShow, regional language social app ShareChat, music service Gaana.com and fantasy gaming startup Dream11.
The year saw eight new Unicorn companies being minted. These included five in the B2C segment — Oyo, PolicyBazaar, Swiggy, Paytm Mall and Byju’s.
The B2B entrants, apart from BillDesk (which is focused on enabling online payments for utilities), included SaaS startup Freshworks (via a $100-million round from existing investors Sequoia Capital, Accel Partners and CapitalG) and two-year-old B2B e-commerce platform Udaan ($225 million from existing investors DST Global and Lightspeed Ventures).
Financial services companies, led by HDFC and Star Health Insurance, attracted 72 investments worth $5.9 Billion and included 17 deals of $100 million or more. The two registrar and transfer agent business investments, which had faced regulatory hurdles in 2017 — the Karvy-General Atlantic deal and the CAMS-Warburg Pincus one — were green-signalled in the second half of 2018.
“The mid-year Walmart-Flipkart deal clearly re-energised international investors’ appetite for mega bets in Indian internet and mobile companies. This helped offset the investment slowdown in sectors like financial services, manufacturing and infrastructure triggered by nervousness in equity markets and the IL&FS scare, towards the end of the year, said Arun Natarajan, founder of Venture Intelligence.
“Whether the PE investment tally for 2019 can outdo the highs of 2018 seems set to hinge substantially on global economic trends in the new year and the outcome of the upcoming general elections,” he added.