Private equity investments and their impact in India

Abstract

The following project report has been split into 3 sections for ease of reading and in order to comprehensively analyse the trend and impact of private equity investments in India across a 10-year period from 2008-18. We utilized secondary data from the Venture Intelligence website in this project. We first begin our analysis by understand the major sectoral drivers of the phenomenal 65% CAGR rate of PE investments in India for the chosen 10-year period. E-commerce, consumer goods and services, technology and BFSI have strongly propelled this growth in investments. We have aimed to thoroughly trace the trend of investments in these 4 sectors, change in industry dynamics with respect to technology, customer behaviour etc., and map these trends to the growth/decline of PE investments. One of the more notable findings is that the investment trends in a few “masthead” companies in a sector significantly impact investments in other firms, such as Flipkart’s devaluation in 2016 leading to a decrease in the overall investment quantum in the e-commerce space in the same year. The next section of the report follows the growth and funding stories for 3 leading start-up ventures in India namely, Flipkart, Freshworks (formerly Freshdesk) and Byju’s. These 3 firms were chosen for business case analyses as they are operating in different industries and wellknown, which in turn helped us glean information associated with the reasons behind their success and the effect of PE investments on their growth trajectories. We have detailed each firm’s business models including revenue streams, acquisitions and funding mechanisms (including details of all funding rounds). The final section tracks private equity investments and exits (including partial exits) through IPOs. The metric chosen to analyse this information was primarily the dollar returns of the PE investments. We have featured and examined investments and returns in several firms across sectors such as textile, logistics, IT & ITES, infrastructure and BFSI. In our analysis, we have also dealt with investments that have significant positive and negative deviations from the dollar returns average, such as Bandhan bank, Dilip Buildcon, Career Launcher and Bombay Stock Exchange. Overall, the aggregate investment capital was INR 8000 crores and the total exit value INR 18000 crores, thereby imputing a dollar return of 2.25.