Private equity investment in India has grown rapidly with investments in maturity cycles of various sectors and companies.
In its analysis of 1,900 investment and 500 sales deals between 2015 and 2020 in India, KPMG has indicated that the value of total yearly deals has doubled and the number of yearly deals has gone up by 60 percent. Excluding sectors such as telecommunications and utilities, PE investment outperformed the capital markets with an average IRR of 29 percent. The analysis is based on 300 selling deals between 2015 and 2019.
The report says that investor confidence in India remains strong. The Indian economy is expected to emerge as the third largest economy by the year 2030 and investors have saved huge capital to participate in India’s success story.
Especially in the last five years, investors have invested billions of dollars in the lifecycle and sectors related to growth, and consumer goods, financial services and e-commerce continue to be in the forefront.
An analysis of the typical 30 deals conducted by KPMG between 2016 and 2020 indicated that return on private investment was good in all sectors.
While successful investment has helped to increase the value of the portfolio, PE and VC to differentiate themselves from others, lack of coordination with the founding promoters, management may affect the brand equity of the investor.
The current epidemic has tested the relationship between PEs and their portfolios and those who have regained confidence in management teams and maintained a journey of change (cost control, supply bottlenecks, providing digital facilities to customers, etc.) Have emerged as preferred investors in the market.