A review of the Indian Private Equity sector and developments in 2016
After the record levels of Private Equity (PE)/ Venture Capital (VC) investments seen in 2015, Indian PE/VC investment activity in 2016 was more measured and sober. The dip in overall dollar value of PE/VC
investments from 2015 levels was largely on account of the slowdown of VC investments in the technology backed start-up ecosystem. PE/VC exits, however continued at more or less the same levels as 2015.
The good news is that the India growth appears to be intact and notwithstanding the impact of demonetisation announced in November 2016, India is expected to regain the position of the ‘fastest growing major economy’ in 2017. This long term secular growth trend coupled with the strength of India’s internal consumption market is what continues to attract PE/VC investment dollars into the country. A stable currency, an increasingly downward trending interest rate curve, continuing government reforms, a relatively young demographic coupled with high quality entrepreneurs add to the mix of attractive macro factors encouraging PE/VC investments into the country. However, the three unforeseen events of Brexit, results of the US Presidential elections and Demonetisation have increased uncertainty and volatility to the global economy, increased upside risk on global crude oil prices and generally seen geo-political tensions rising. All these extraneous factors are expected to inject a dose of caution into risk capital allocation in India as well as overseas.
Encapsulating the key investments, exits, trends and 2017 outlook for the PE and VC space, KPMG in India Private Equity Group has published a report, “Private Equity Review –2016”. We hope you find this report useful to read.
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