Global PE investors eye bigger pie of India’s software services sector
This is fuelled by a substantial increase in growth capital investments within the IT services sector by global PE funds, which was not prevalent earlier.
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Offering CollegeCourseWebsiteIIM LucknowIIML Executive Programme in FinTech, Banking & Applied Risk ManagementVisitIIM KozhikodeIIMK Advanced Data Science For ManagersVisitIndian School of BusinessISB Product ManagementVisitThe number of PE firms holding majority stake in Indian IT services companies had doubled between 2019 and 2022 to more than 50, as per Avendus Capital data. According to more recent data from GrowthPal, an M&A deal sourcing platform, inbound deals from global investors betting on Indian firms rose 35% in 2023, faster than the previous year's growth rate of 25%.
Indian IT firms are trading at a premium to their global counterparts due to their growth performance and potential, industry executives said, citing this as one of the reasons for the PE interest. Also, the startup space has become risky due to corporate governance and sustainability issues, leading to increased interest in the IT space where — even though these deals involve small and midsize firms — the models are time tested.
«While only around 10 PE funds held majority investments in the IT services sector between 2008 and 2013, today, this number has jumped to over 50 funds with majority stake in IT services (2018-2023),» said Shobhit Jain, managing director and co-head of enterprise technology & services for investment
