Large ticket deals drive rise in private equity investments in India this year

Large ticket deals drive rise in private equity investments in India this year
PE/VC funding has increased in India in 2019 so
  • According to reports, private equity and venture capital investments grew 14% in February with investments worth $1.96 billion.
  • The investments are up thanks to large ticket deals across the country.
  • With India’s rising number of unicorns and relaxed norms for angel tax, the country is set to see funding deals across stages.
For Indians startups it has been a great start to the year with increased funding. In February alone, private equity and venture capital investments grew 14% with investments worth $1.96 billion happening in India, according to data from Venture Intelligence, a data research firm.

The month of January had seen a total of $1.71 billion investment for startups and businesses alike. The funding in February grew by 40% when compared to investments in February 2018.

February 2018February 2019
Total PE/VC investments in $mn1,401 1,963
January 2018January 2019
Total PE/VC investments in $mn2,2541,719

Data from Venture Intelligence

So far this year, while the number of deals have dropped since the same period last year, there has been a rise in the deal value. That is because of large ticket investments in 2019 that led to the increase in total amount of funding in the first two months of 2019.

According to the report, investments in Greenko Energy, Aadhar Housing Finance, Ayana Renewable Power along with a bunch of startup deals helped rake up the numbers in February this year.

"An increase in large-ticket investments also reflects the rise in confidence of the investors and strengthening the role of PE/VC fraternity as growth capital providers," Pankaj Chopda, director, Grant Thornton India LLP had earlier told ET regarding the growth in investments in January,

For early-stage deals in the country, a big relief came in from the Indian government by changing the definition of startup to exclude the burden of Angel Tax. An entity will now be considered a startup for a period of 10 years from the date of its incorporation as opposed to the earlier norm of seven years, according to an official Gazette notification by the government.

The exemption for angel tax for shares issued or proposed has also been hiked to an aggregate limit of ₹25 crore from ₹10 crore. This will likely further boost investments in the country as early stage investors will not be wary of tax.

India’s fast-growing startups have garnered interest from PE/VC funds from across the world. There are now over 20 unicorns in the country. With many more like logistics startup Rivigo, e-commerce startup BigBasket steps away from rising to the unicorn status, India is surely set to see more funding soon.

See Also:
Delhivery becomes India’s first unicorn in 2019, thanks to SoftBank

Watch out Uber. Sachin Bansal gets Ola share after selling Flipkart

For Indian startups, 2018 has been a year of bouncing back as venture capital funding doubles