IBEF: November 13, 2019
According to a report by Indian Private Equity & Venture Capital Association (IVCA) and EY (EY) report, the private equity and venture capital (PE/VC) investments in October stood at US$ 3.3 billion across 91 deals, while exits accounted for US$ 960 million across 14 deals.
Infrastructure accounted for 43 per cent of all PE/VC investments of the month, recording investments of around US$ 1.4 billion.
The total year-to-date PE/VC investments in India stands at US$ 43.7 billion, which is 16.5 per cent higher than the previous high of US$ 37.5 billion that was recorded in the entire 2018. Though, there was fall in investment from September 2019 which received US$ 3.7 billion.
The deals recorded in October 2019 stood at 91 deals which is 42 per cent higher as compared to October 2018 that was 64 deals, although recorded deals were 7 per cent lower than September 2019 which stood at 98 deals.
Mr Vivek Soni, Partner and National Leader Private Equity Services, EY said, "PE/VC investments in 2019 have maintained a consistent monthly run rate of over US$ 3 billion and October was no different. We are already at US$ 43.7 billion on a year-to-date basis and well on track to hit the US$ 50 billion mark for the year."
"Global buyout, pension and sovereign funds continue to take large bets in the Indian infrastructure sector, and this trend is expected to remain strong in the near future. With global interest rates once again on a downward trend, steady yield-generating assets in India present a good opportunity for large global pools of capital hungry for yield," he said.
From a sector point of view, infrastructure (US$ 1.4 billion), financial services (US$ 832 million) and technology (US$ 278 million) were the top three sectors in terms of PE/VC investments in October 2019.
Infrastructure accounted for 43 per cent of all PE/VC investments of the month, compared to 6 per cent in October 2018.
The five large deals recorded in the month that valued greater than US$ 100 million, contributed US$ 2.2 billion compared to seven large deals worth US$ 2.7 billion in October 2018, and 11 large deals worth US$ 2.6 billion in September 2019.
Abu Dhabi Investment Authority (AIDA), Public Sector Pension Investment Board (PSP Investments) and National Investment and Infrastructure Fund's (NIIF) US$ 1.1 billion investment in GVK Airport Holdings is the largest deals announced in October 2019 and was in infrastructure sector.
When taking deal type in consideration, growth deals recorded the highest value of investments in October 2019 at US$ 1.7 billion across 16 deals, compared with 15 deals worth US$ 1.9 billion in October 2018 followed by start-up investments worth US$ 717 million across 64 deals (US$ 281 million across 33 deals in October 2018) and buyouts at US$ 500 million across five deals (US$ 941 million across five deals in October 2018).
There were 14 exits recorded in the month worth US$ 960 million which is 30 per cent lower than the value of exits recorded in October 2018 (US$ 1.4 billion) and 64 per cent lower than September 2019 (US$ 2.6 billion) which had recorded the large US$ 1.5 billion partial buyback by Oyo's founder.
The month witnessed highest open market exits at US$ 878 million across eight deals, accounting for 91 per cent of total exits by value. The month also recorded the highest monthly value of open market exits in two years. There was no PE-backed Initial Public Offering (IPO) in October 2019.
"Exits have been fairly muted for most of 2019 due to the subdued sentiment in the capital markets. In 2019, year-to-date exits totalled US$ 9.1 billion compared with US$ 26 billion over the same period last year. However, if we adjust for the large US$ 16 billion Walmart-Flipkart deal, the under-performance in PE/VC exits is not significant," Mr. Soni said.
"2019 is expected to be one of the better investment vintages for the Indian PE/VC industry. However, uncertainties around US-China trade talks and global as well as domestic growth could dampen the sentiment in the short-term. Nonetheless, LP and GP interest in India's long-term growth prospects remains intact", he added.
The largest exit in October 2019 saw Fairfax sell its 9.9 per cent stake in ICICI Lombard General Insurance Company Limited in the open market for US$ 732 million.
The total fund raised stood at US$ 403 million compared with US$ 641 million raised in October 2018.
The largest fund raised in October 2019 was of Xander's US$ 250 million platform for investments in the industrial realty (logistics and e-commerce) sector.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.