Public market exits by PE/VC firms see sharp uptick in 2023

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Coforge in August. SoftBank and Tiger Global sold blocks in Zomato, Paytm, Delhivery, and PolicyBazaar, as the focus turned on venture capital firms returning capital to their fund investors or limited partners. Open market exits by PE/VC firms have been the highest since 2017, according to Vivek Soni, partner and national leader, private equity services, EY.

“Large block deals have happened and are happening with minimal discount or disruption to stock price," Soni said. Investors have also been buoyed by the benchmark Nifty and Sensex indices hitting record levels over the month. The 50-stock Nifty crossed 21,000, while the 30-share Sensex crossed 71,000 in December—both record levels for the indices.

This has resulted in a steady pipeline of initial public offerings hitting the market, with PEs and VCs offering partial stakes in the offering. “We saw a resurgence in FII (foreign institutional investor) inflows over the past few weeks, driven by an improvement in global risk appetite and local factors such as the outcome of state elections and continued India macro resilience. This, in combination with continued momentum in domestic inflows, created a strong environment for deployment, which helped absorb secondary exits through IPOs and blocks and also resulted in a strong aftermarket for these transactions," Subhrajit Roy, head, India global capital markets, Bank of America, said.

The firm has advised multiple sellers on block deals in 2023, including arranging trades in Zomato and Policy Bazaar. EY’s Soni said that this trend would continue into 2024. The rise in exits is mirroring a similar uptick in private equity investments in public markets.