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Perspective

Problem of plenty
PE and VC investments hit an all-time high in 2017 as investors pumped in a record $24 billion, 41% higher than the previous high seen two years ago

N Mahalakshmi

It seems the euphoria in the public market has also gripped the private equity (PE) space. PE and venture capital investments hit an all-time high in 2017 as investors pumped in a record $24 billion, 41% higher than the previous high seen two years back. But unlike 2015, what stood out last year was the mega bets that investors were willing to make – be it Softbank’s $2.5 billion bet on Flipkart or Tencent-led billion dollar investment in Ola. Flush with funds, Softbank, Tencent and Alibaba are making outsized bets on homegrown consumer technology companies. With growth tapering off in China, it is crucial for Alibaba and Tencent to find their next big market. While they are placing their bets on India, achieving a similar scale and profitability in an open and competitive market, unlike China, will be super challenging. While these investors have given the much-needed exit to early-stage investors, with no clear path to profitability, they’ve clearly not bought themselves a bargain.

Interestingly, traditional private equity investors aren’t shying away either. The slew of reforms announced by the government and healthy return multiples seen through public market exits have emboldened the faith in India, spurring investments across financial services, manufacturing and logistics sectors.

In 2017, the top 10 public market exits generated an average 6x return for investors – not bad at all. Our cover story, analyses the deals done over the past one year, highlighting the potential opportunities and pitfalls that lie ahead.

Among other stories in the issue, we have a feature on how infotainment major Discovery Communications is charting out into an unknown territory by entering the Hindi general entertainment space. It has launched its channel, Jeet, in a hugely competitive genre, ruled by players 10 times its size. Among other stories,Captain Gopinath of Air Deccan explains why he is confident of getting it right this time around. We also take a look at how life insurance companies are increasingly finding favour among investors.

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