The fast growing technology sector in India has recorded one of the highest ever deal value of US$ 11.5bn from close to 400 deals including M&A and PE in 2014, finds Grant Thornton – IVCA Technology Dealtracker. This was largely due to the big ticket e-commerce PE investments along with large cross-border acquisitions by leading IT majors. The trend has continued into 2015 also with large IT and BPO players looking at cross border acquisitions to consolidate service offerings and expand geographic coverage.
E-commerce or technology enabled companies have shown significant growth in both volume and value of deals. E-commerce accounted for 30% of the total value of deals in technology sector in 2012, which augmented to 75% in 2014. While all sub segments within e-commerce have garnered investor interest in terms of number of deals, e-tailers such as Flipkart and Snapdeal, with their multiple products and brands, have driven big ticket investments constituting 68% of the total deal value in 2014.
While launching the report, Harish HV, Partner, Grant Thornton India LLP said, “India, from being merely a technology adapter or importer, is now becoming a creator for technology enabled disruptive solutions. There is a clear desire and confidence that Indians can create unique solutions for the local market and also compete actively in the global market. The presence of a complete life cycle of investors from angel, to seed to VC to PE to Public has no doubt contributed to this trend and we can safely say that the ecosystem for a start-up is in place and that combined with entrepreneurship has resulted in an explosive growth of start-ups and deal activity.”
While the above largely covers big ticket investments, it is important to highlight that 80% of PE investment volumes fall into the subUS$10mn deals. Here again the fundamental driver is revolutionising concepts and ideas to enable businesses to reach a wider Indian audience, be it to transform the way payments are made, or products delivered, or aggregation of various service providers through technology.
“The present time is clearly one which holds promising growth opportunities for India Inc. With a stabilizing capital market, stable government and hopes of new reforms, we expect heightened interest from global investors in the Indian economy in the coming year. As VC/ PE is swiftly becoming the avenue of choice for dynamic companies seeking finance to fund their growth plans, hence, we feel this report will be very useful for understanding the role of VC/ PE funding in the growth of India’s ever evolving technology sector” said Mr. Arvind Mathur, President, Indian Private Equity & Venture Capital Association (IVCA).
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