‘Fin Services sector gets highest ever half-yearly PE/VC funding at $4.2 bn’ : 18-09-2018

The first half of calendar year 2018 has seen financial services emerge as a key sector attracting investments by private equity (PE)/Venture Capital (VC) players at $4.2 billion across 74 deals, a report by EY-IVCA has said. This is also the highest ever half-yearly investment into the financial services sector.

The sector also garnered the highest share of PE/VC investments from 2015 until the first half of 2018 (H12018) with $16.6 billion across 311 deals.

The report explains that 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 specialised 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%, it said.

Vivek Soni, Partner and National Leader for Private Equity Services, EY India points out that the confidence of PE/VC investors in the Indian financial services (FS) story could be further bolstered by Berkshire Hathaway’s first investment in India, in Paytm.

“With innovation in technology abounding, the 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,” he said.

The banking sector witnessed 28 transactions in 16 targets during the period 2015 to H12018 whereas non-banking finance companies attracted 107 PE/VC investments in the same period.

Insurance received a total of 29 PE/VC investments. “The average ticket size for investments in insurance underwriting companies is high: $226 million for life insurance and $60 million for general and health insurance. PE funds, which demonstrated the most interest in this space were Temasek, KKR, Warburg Pincus, Softbank and PremjiInvest,” the report pointed out.

The housing finance sector witnessed 18 transactions in 2015-H12018 with total deal value of $2.3 billion and average deal size of $135.5 million, mainly skewed by a single large deal of $1.7 billion wherein GIC, KKR and others invested in HDFC for a 3.9% stake, according to the report.

In the same period, the payments sector saw 26 transactions with the total amount invested being $2.4 billion.


Source : Financial Express

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