India remains the most attractive market for private equity investments in Asia-Pacific, followed closely by China, according to a report from Bain & Company.
In its India Private Equity Report 2016, the consultancy said deal activity, deal volume and deal value in India all increased in 2015.
Total private equity deal value – including real estate and infrastructure – grew 51 percent to approximately $23 billion, brought about by big-ticket deals such as the acquisition of Bangalore-based service provider Atria Convergence Technologies by India Value Fund Advisors; online marketplace Snapdeal acquired by BlackRock, PremjiInvest, Alibaba and Softbank; and non-banking financial company Shriram City Union, which is backed by Apax Partners.
India-focused private equity firms have stored up approximately $11 billion in dry powder, up from last year’s $8 billion.
Of the $23 billion worth of deals in 2015, the biggest investments were made in consumer technology, real estate, and banking, financial services and insurance (BFSI) sectors.
Growth-stage and late-stage deals were the most prominent in 2015 by deal value, and funds expect growth-stage and buyout deals to dominate in the future.
Meanwhile, the report highlighted that several sovereign wealth funds (SWFs) have increased direct participation in India deals, with 24 SWFs involved in deals in 2015, compared with 19 in 2014.
Singapore’s Government Investment Corporation and state investor Temasek have been actively pursuing deals including taxi and auto-rickshaw app Ola Cabs and consumer products company Crompton Greaves. Other SWFs with direct investments in India include the Abu Dhabi Investment Council, Qatar Investment Authority, Khazanah National Berhad and Oman India Joint Investment Fund.
Private equity firms surveyed by the consultancy also expect co-investments with limited partners to increase in 2016.
In terms of fundraising, the report noted that funds allocated to India – as in the rest of Asia-Pacific – declined in 2015. On a regional level, funds declined by 14 percent in 2015 to $50 billion, while funds allocated to India dropped by 12 percent.
The exit market in India performed “exceedingly well” in 2015, with reported exits in the country growing by 10 percent from 2014 to 2015. In addition, the value of exited investments increased by 57 percent across the same period, rising from $6 billion in 2014 to $9.4 billion in 2015.