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PE/VC investments in October at $3.3 billion: Study

Our Bureau Mumbai | Updated on November 11, 2019 Published on November 11, 2019

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Private equity and venture capital (PE/VC) investments in October was steady at $3.3 billion across 91 deals, while exits accounted for $960 million across 14 deals, according to a report by Indian Private Equity & Venture Capital Association (IVCA) and EY (IVCA-EY).

The infrastructure sector recorded $1.4 billion in investments, accounting for 43 per cent of all PE/VC investments during the month.

The investments in October were 11.5 per cent lower to that of September 2019 ($3.7 billion), while the total year-to-date PE/VC investments in India now stand at $43.7 billion, higher by 16.5 per cent than the previous high of $37.5 billion recorded in entire 2018.

The reporting month recorded 42 per cent higher deals compared with October 2018, but 7 per cent lower compared with September 2019 (91 deals in October 2019 versus 64 deals in October 2018 and 98 deals in September 2019), it added.

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 $3 billion and October was no different. We are already at $43.7 billion on a year-to-date basis and well on track to hit the $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.

Infra, financial services reign

From a sector point of view, infrastructure ($1.4 billion), financial services ($832 million) and technology ($278 million) were the top three sectors in terms of PE/VC investments in October 2019.

Investments in infrastructure accounted for 43 per cent of the total PE/VC investments in October 2019, compared to 6 per cent in October 2018.

The month also recorded five large deals (value greater than $100 million) totalling $2.2 billion compared to seven large deals worth $2.7 billion in October 2018, and 11 large deals worth $2.6 billion in September 2019.

The largest deals announced in October 2019 was in infrastructure sector (Abu Dhabi Investment Authority (AIDA), Public Sector Pension Investment Board (PSP Investments) and National Investment and Infrastructure Fund’s (NIIF) $1.1 billion investment in GVK Airport Holdings.

In deal type, growth deals recorded the highest value of investments in October 2019 at $1.7 billion across 16 deals, compared with 15 deals worth $1.9 billion in October 2018 followed by start-up investments worth $717 million across 64 deals ($281 million across 33 deals in October 2018) and buyouts at $500 million across five deals ($941 million across five deals in October 2018).

Exits

The month recorded 14 exits worth $960 million, 30 per cent lower than the value of exits recorded in October 2018 ($1.4 billion) and 64 per cent lower than September 2019 ($2.6 billion) which had recorded the large $1.5 billion partial buyback by Oyo’s founder.

In October 2019, open market exits were highest at $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 $9.1 billion compared with $26 billion over the same period last year. However, if we adjust for the large $16 billion Walmart-Flipkart deal, the under-performance in PE/VC exits is not significant,” 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 $732 million.

Fund raise

The month under review recorded total fund raises of $403 million compared with $641 million raised in October 2018.

Xander’s $250 million platform for investments in the industrial realty (logistics and e-commerce) sector was the largest fund raise in October 2019.

Published on November 11, 2019
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