PE, VC investments surge 60% to a record $26 billion in 2017: Study

Representative Image

Investments by private equity and venture capital funds surged 60 per cent to a record high of $26 billion in 2017, while the bull markets helped register highest ever exits in a year, a report said on Thursday.

The exits grew 60 per cent to $15.7 billion with the public market being the preferred mode, consultant Bain & Company said.

Terming the year as a "strong year" for the private equity market, its partner Arpan Sheth attributed the rise to improving economic indicators, formalisation of the economy, and steps like the passage of the bankruptcy law to address the non-performing assets issue.

From a fundraising perspective, there was a 48 per cent increase with India-focussed funds raising $5.7 billion, it said, with a bulk $5.1 billion being raised by alternate investment funds like those looking for assets in distress.

The quantum of "dry powder", or the investible money which the funds are sitting on, is constant at $9 billion at the end of the year, it said.

The mergers and acquisition activity increased 53.3 per cent to $77.6 billion, it said adding that the number of active institutional investors has increased to 491.

The report said there were over 200 exits during the year and they were driven more by transaction value. As against a 60 per cent surge in value, the number of deals grew by only 7 per cent, it said.

However, in its report, which comes amid concerns of high valuations in the country, Bain said most funds expect a decline in returns by 2-4 per cent in the next 3-5 years.

"According to India-focused fund managers, a mismatch in valuation expectations between investors and firm owners hinders deal making, while a high level of returns could hinder exits," it said.

The funds are also concerned about limited partners investing directly into companies, it said.


Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel