India Data Insight (Q3 2018)
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Despite recent shocks to its financial system, private capital fundraising and investment in India grew 52% and 42%, respectively, in Q1-Q3 2018 compared to the first three quarters of 2017. Bankruptcy proceedings of Indian non-banking financial companies (NBFCs) have dealt a blow to the country’s financial sector, which has historically been a significant focus area for GPs. However, the growth of private credit strategies suggests that GPs are primed to find opportunities within the crisis. The number of private credit deals has climbed steadily since 2014, indicating an expansion in venture debt and small-cap direct lending strategies with the potential to fill the financing void left by NBFCs. Several larger investments in non-performing NBFCs are also in the pipeline. However, amid currency devaluation and weak stock market performance, public market and secondary sale exits dropped signifi-cantly in Q1-Q3 2018. The only exit strategy that has remained popular this year is strategic sales, highlighted by Walmart’s US$16 billion Flipkart acquisition in Q3. Witnessing increased consolidation in the relatively high-end e-commerce segment, GPs invested US$107 million in social networking startups in Q1-Q3 2018. These companies, which serve a wider range of consumers and can leverage user networks to market additional goods and services, may be the next technology frontier for investors in India.