PE/VC exits till Oct cross yearly highs

After record-high investments, Private Equity and Venture Capital funds are making record high exits, indicating the good health of the market. The funds have registered highest–ever exits within the 10-month period till October and the exit value is 1.9 times higher than the total exits of 2017.

Exits till October aggregate $24 billion, compared to $9.9 billion during the same period last year. For the entire year 2017, the exits totalled $13 billion. This was also higher than previous year. At $24 billion, exits got closer to the total investments of $25.2 billion during the 10-month period.

Softbank, Naspers, Tiger Global and a bunch of early investors selling their stake fully or partially to retail major Walmart for $16 billion was one of the largest exits that happened this year. Among the other major exits, Blackstone’s quit Intelenet Global for $1 billion in a stake sale to Teleperformance SA TPG exited Vishal Mega mart for $769 million, selling stake to Partner’s group and Kedaara Actis sold shares of Ostro Energy to ReNew Power for $692 million.

Exits in the month of October itself valued at $1.4 billion and was more than twice the value recorded in October last year. The biggest deal in the month was Blackstone - Intelenet Global deal. Open market exits continued to be impacted by volatility in the markets, recording just one deal worth $15 million. At $7 billion, buyouts in this year till the date more than the value of buyouts in the previous two years combined.

From a sector perspective, technology recorded highest value of exits on the back of the large $1 billion Blackstone-Intelenet Global exit followed by financial services ($175 million across 2 deals).

“Despite the underperformance in open market exits, PE/VC exit activity continues to remain robust with support from strategic and secondary deals. 2018 is also expected to become an inflection point for the Indian PE/VC industry as PE/VC exits come close to the value of PE/VC investments, moving towards mature market standards and away from previous trends where the PE/VC exits would almost always be less than 50 per cent of PE/VC investments. Though this has largely been aided by the large Walmart-Flipkart deal; it nonetheless marks a significant shift in the evolution of the PE/VC industry and is expected to boost LP confidence for the Indian PE/VC ecosystem,” said Vivek Soni, partner and national leader private equity services, EY. 

However, going forward the investors are expected to be cautious due to the macro-level factors. “Looking forward, in the short-term, we expect investors to be relatively more circumspect than the beginning of the year. Increased uncertainty on account volatility in crude oil prices, depreciating rupee, talk of trade wars, current liquidity related issues attributed to the NBFC sector and other factors have driven up business risk premium. With the upcoming state and general elections, the evolving NPA situation and the developing situation around selected NBFCs is prompting investors to take a cautiously optimistic approach compared to the relatively bullish mood at the beginning of 2018,” he added.