Venture investments decline to $26.3 bn in 2018: Study

Chennai: Venture investments in the country declined marginally to $26.3 billion in 2018 despite a surge in number of deals announced, a report said.

The report by consultancy firm Bain & Company said, investments by venture capital and private equity funds in the country declined last year from $26.8 billion in the previous year.

The number of transactions however surged to 793 in 2018 as compared to 700 in the year-ago period, it said.

The “dry-powder” (liquidity) available with investors focused on the country has declined to $11.1 billion at the end of 2018 from $11.7 billion in the year-ago period, but it is ‘more than adequate’ and high quality deals will not lack capital, the report said.

Fund raising will continue to be a key priority for many investors in India, but most expect it to become more challenging in the next 12 months, the report stated.

Powered by the $16 billion acquisition of Flipkart by American retail giant Walmart, 2018 was one of the best years for exits, it said.

The overall exits zoomed to $32.9 billion during the year as against $15.7 billion in 2018 and $9.6 billion in the year before that.

The report said private equity funds are increasingly prioritising deal quality over quantity, with the top 15 deals comprising about 40 per cent of total deal value and the number of deals greater than $50 million increasing from the previous year.

Investments in consumer tech declined by $2 billion to $7 billion, but the sector continued to be the favourite for deal making, it said.

The banking, financial services and insurance (BFSI) segment remained dominant with almost $5 billion investments in 2018, driven by a rising class of non-banking financial companies (NBFCs).

Government regulations and tax breaks aided the growth of alternative investment funds and distressed asset management funds, it said.

“Considering how India’s economy is poised for growth in the coming year, many more exits are expected during the next few months,” the firm’s partner Arpan Sheth said.

NT Bureau