India exits: Where’s the cash?

Speaking to AVCJ last week, Vishal Nevatia, IVFA's managing partner, stressed not just the number of exits but also the consistency in returning capital. The firm claims to have lost money on one deal in its 15-year history, and that was a relatively small transaction in Fund I.

On the back of this track record, IVFA closed its fifth fund within eight months at the hard cap of $700 million. The GP is the first in the current wave of India-focused managers to announce a final close, although Everstone Capital is unlikely to be far behind. It remains to be seen what happens to the half dozen or so still in the market.

India-focused managers have raised $2.99 billion so far this year, including incremental and final closes. With several months still to run, the 2015 total is already the highest seen since 2011.

Over one third of this capital has gone to venture capital firms, or to be more specific, three VC firms: Nexus Capital Partners, SAIF Partners and Accel Partners. With a few more closes expected before the end of the year, 2015 could surpass 2008 as the biggest ever for venture fundraising. This is perhaps unsurprising, given the amounts of capital being deployed in the country's e-commerce market.

PE cannot claim to have the same kind of momentum, but the revival in investor sentiment towards India following last year's general election - and the expectation that the new government can deliver consistent growth - has helped GPs. Where the country was once the pariah of Asian PE, now it is the market that might deliver a strong vintage of funds.

However, for LPs to be fully convinced, managers have to return more capital, as the IVFA experience suggests. As it happens, 2015 is already a record year for PE exits in India, according to AVCJ Research. GPs generated $5.37 billion in the first eight months, edging ahead of the $5.23 billion seen in each of 2012 and 2013.

In addition, six PE-backed IPOs have delivered proceeds of $389.8 million, less than half the 2012 figure but still more than twice the total for 2013 and 2014 combined. A handful of other portfolio companies have submitted filings and are at varying degrees of readiness to go public.

Some LPs privately express skepticism as to whether certain India-focused private equity firms looking to raise new funds will deliver. Too many investments remain underwater from the pre-global financial crisis boom period. But they remain hopeful that a leaner, more sophisticated industry will emerge from the ashes. Maybe it already is.

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• Topics
• South Asia
• Exits
• Fundraising
• India
• Exit
• Fundraising