Private equity and venture capital investments in India stood at $4.8 billion across 94 deals, with investments of $1.9 billion in financial services in November. Exits recorded $1.4 billion across 15 deals on the back of a pick-up in open market exits, according to a Indian Private Equity & Venture Capital Association-EY study.

“November was a good month for PE and VC investments. PE and VC investments in 2019 have clocked over $44 billion till date and could end up at the $48-50 billion mark for the year. This is a significant figure, with PE and VC investments at 1.7-1.8 per cent of GDP, we are almost on a par with China and the global average for PE/VC investments to GDP ratio,” Vivek Soni, Partner and National Leader, Private Equity Services, EY, said.

A significant part of the growth in 2019 has come from the robust investment flows in the infrastructure sector (one-third of all investments in 2019). This was driven by strong interest from yield hungry global pools of capital in the form of pension funds and sovereign wealth funds, as also by policy reforms and introduction of new investment structures such as InvITs and REITs by the Government.

Also read: PE/VC investments in India rises to an all-time high of $36.7 bn: Study

Pure play PE/VC deals continue to progress at the same levels as last year, recording over $25.1 billion in investments. This segment could also pick up steam as the Government embarks on its disinvestment agenda and many corporates offload stakes to raise capital.

While exits have been subdued for most of 2019, with year-to-date exits totalling $10.5 billion compared to $27 billion over the same period last year, activity has picked up slightly with the revival of deals in the open market, on the back of an improvement in capital market sentiment.

Also read: India PE/VC investments cross $23 billion in first half of 2019

“While 2019 has emerged as the best year for PE/VC investments in India, uncertainties around global factors as well as the slowing down of domestic growth could dampen sentiment in the short-term,” he added.

Also read:  PE/ VC investments rise 51% in Feb: EY India

Investments

The $4.8 billion PE/VC investments in November were 2.8 times the value recorded in November 2018 ($1.8 billion) and 50 per cent higher than that in October 2019 ($3.2 billion). The total PE/VC investments in India, year-to-date, now stand at $44.2 billion, which is 18 per cent higher than the previous high of $37.4 billion recorded in the whole of 2018.

In volume terms, November 2019 recorded 38 per cent more deals compared to that in November 2018 and 6 per cent more than that in October 2019 (94 deals in November 2019 versus 68 deals in November 2018 and 89 deals in October 2019, the study said.

Also read: No big deal in Jan, PE/VC investments down by half year-on-year: EY study

The improved performance in November comes on the back of a higher number of large deals (value greater than $100 million); 12 large deals aggregating $3.8 billion were recorded in November 2019, compared to five large deals worth $950 million in November 2018, and five large deals worth $2.2 billion in October 2019.

The largest deals announced in the month include Alibaba Group and Softbank’s $1-billion investment in Paytm, followed by a $627-million investment in Zee Entertainment Enterprises by a group of investors, including GIC, Morgan Stanley and others, and Unison Capital Partners’ buyout of Kyowa Pharmaceutical Industry Company Ltd (Lupin’s Japan business) for $525 million from Lupin.

Financial services ($1.9 billion) was the top sector, recording the highest value of investments since January 2018. November 2019 saw some new sectors entering the top league, with the life sciences sector (pharmaceuticals and healthcare) recording PE/VC investments of $1.2 billion in November.

Third in line was media and entertainment, with $631 million in PE/VC investments for the month, the study said.

In deal type, growth deals recorded the highest value of investments in November 2019 at $1.8 billion across 23 deals, compared to 12 deals worth $304 million in November 2018, followed by private investment in public equity (PIPE) investments worth $1.2 billion across seven deals ($241 million across seven deals in November 2018) and buyouts at $810 million across three deals ($449 million across three deals in November 2018).

Exits

The reporting month recorded 15 exits worth $1.4 billion, twice the value of exits recorded in November 2018 ($676 million) and 41 per cent higher than that in October 2019 ($960 million). The growth was primarily because of two large open market deals accounting for $1 billion of total exits in November 2019.

The largest exit in November 2019 was that of Bain Capital and GIC, which sold their combined stake of 14.6 per cent in Genpact for $625 million, followed by Carlyle’s sale of its 3 per cent stake in SBI Life Insurance Company for $393 million.

In November 2019, open market exits were the highest at $1.1 billion across five deals, accounting for 82 per cent of the total exits by value. November 2019 recorded the highest monthly value of open market exits in two years. While open market exits have witnessed a revival in conjunction with an improvement in capital market performance, there have been no PE-backed Initial Public Offerings for three consecutive months since August 2019, the study said.

The technology sector ($625 million across two deals) was the top sector in November 2019, accounting for 46 per cent of all exits by value.

Fund raise

The month recorded total fund raises of $172 million, compared to $398 million raised in November 2018. While fund raises were lower in November 2019, investors remain upbeat, with large India-dedicated fund raise plans being announced. Fund raise plans worth $2.3 billion were announced in November 2019, which includes the first India-dedicated fund raise plan of $1.5 billion announced by Warburg Pincus.

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