As per EY-IVCA latest report, PE/VC Agenda – 1H18, the Financial Services sector garnered the highest share of PE/VC investments from 2015 until 1H18 with US$16.6 billion across 311 deals. 1H18 has also seen highest investments by PE/VC with US$4.2 billion invested across 74 deals, the highest ever half-yearly PE/VC investment into the Financial Services sector.
Financial Services has emerged as a key sector of interest for PE/VC investments, with investments made across all the varied business models ranging from pure play banks to specialized NBFCs, small finance banks, online credit platforms, insurance companies, and payment solution companies. With a significant section of the Indian population still unpenetrated by financial services, there is a huge growth potential for the financial services industry as the Indian economy continues to grow at a healthy rate of more than 7%.
Vivek Soni, Partner and National Leader for Private Equity Services, EY India, says, “Financial Services has witnessed significant interest from PE/VC investors over the past three and a half years. Given the vast unbanked population and low penetration of financial products, coupled with a diversity of investment options available across banks, NBFCs, microfinance institutions, insurance companies and payment companies; the Financial Services sector is expected to continue attracting PE/VC investments. This confidence of PE/VC investors in the Indian FS story could in our view, be further bolstered by Berkshire Hathway’s first investment in India, in Paytm, a PE/VC backed financial services company. With innovation in technology abounding, Indian Financial Services sector is at an inflection point, the Berkshire-Paytm transaction could potentially be an important milestone in the evolution of the India story”
Padmanabh Sinha, Chairman IVCA and Managing Partner, Tata Opportunities Fund says, “PE/VC investments into India have witnessed steady and structural growth over the last few years (continuing into 1H18) as borne out by the EY report. In terms of high quality governance, consistent performance and growth, job creation and taxes, the companies backed by PE/ VC funds have shown better performance vis-à-vis other companies. Within the Financial Services sector, PE/VC backed companies help bring innovation and financial inclusion in the Indian economy.”
