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This week, The Blackstone Group announced
its plans to acquire
a majority stake in Bangalore-based information technology services provider
Mphasis Limited from Hewlett-Packard Enterprise for $825 million. This deal
marks Blackstone’s largest investment in India, however questions about the
stability of the Indian economy’s growth potential remain to be answered.
Despite fund managers’
increasing interest in India’s private equity space and India outstripping China
as the fastest growing economy in the world, concerns have been raised about
the viability of the growth statistics provided by Indian government agencies. There
has been scepticism surrounding whether an economy largely reliant on exports
and agriculture, which was subjected to serious negative pressures last year,
can feasibly have grown at a rate of 7.5 percent in 2015.
PEI Research & Analytics has taken this
opportunity to delve further into India’s economy, particularly the venture
capital industry, which can be viewed as an indicator of India’s capacity for long-term
growth and innovation.
Fund managers raised a record amount of
capital for India-focused venture capital funds in 2015. With $3.55 billion amassed
across 17 vehicles, the Indian venture capital sector surpassed every other
strategy in the private equity industry. The largest of these funds was Sequoia
Capital India IV which closed at $740 million, $140 million over its initial
The amount raised in 2015 is far greater
than the $500 million raised in 2014, and is the largest amount since 2011. Fundraising
for closed-ended venture capital vehicles fell 86 percent between 2011 and
However, the first quarter of 2016
indicates 2015’s appetite for closed-ended venture capital funds is not a blip,
with $920 million being raised by the single fund closed so far, Sequoia
Capital India V.
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