Private Equity in India Fintech: A Lifecycle Analysis
Idris Ali1, Dhiraj Sharma2
1Idris Ali Yimer, Department of Commerce, Punjabi University, Patiala (Punjab), India.
2Dr. Dhiraj Sharma, Department of SMS, Punjabi University, Patiala (Punjab), India.
Manuscript received on 11 September 2022 | Revised Manuscript received on 10 November 2022 | Manuscript Accepted on 15 November 2022 | Manuscript published on 30 November 2022 | PP: 77-81 | Volume-2 Issue-2, November 2022 | Retrieval: 100.1/ijef.J171710100624 | DOI: 10.54105/ijef.J1717.02021122
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© The Authors. Published by Lattice Science Publication (LSP). This is an open-access article under the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
Abstract: Over the past two and a half decades, India’s venture capital and private equity industry have undergone significant growth, driven by the liberalization of the Indian economy and the emergence of a dynamic start-up ecosystem. While the Fintech sector has been preferred for VCPE investments, research on private equity activity in this industry has been limited. This study aims to address this research gap by providing comprehensive insights into the lifecycle of private equity investments in the Fintech industry in India. The study examines private equity investment and exit activity in the Indian Fintech industry between 1998 and Q1 2023. Our research findings indicate that the Fintech industry in India has attracted considerable investments at notably higher entry valuation multiples. Moreover, a few sectors within the industry have garnered higher investments and valuation multiples. Private equity investors have generated significant returns from exits in the fintech industry, with M&As being the preferred exit route during the study period. However, our analysis indicates that exit valuation multiples were lower than entry multiples. This research provides valuable insights for investors and entrepreneurs seeking to understand the Indian Fintech industry and its potential for private equity investments. Three item lists of highlights ▪ Private equity investment in Fintech is significant, with the majority of investments occurring in the seed and early stages. ▪ The software and apps, personal finance, and insurance sectors generated the highest cash flows for exited deals in Fintech. ▪ Mergers and acquisitions were the most preferred exit routes for private equity investors in the Fintech space.
Keywords: Private Equity (G24), Fintech (G23)
Scope of the Article: Economics