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

The private equity and venture capital (PE/VC) investments in India crossed $23.4 billion in the first half of calendar 2019, 27 per cent rise from the same period of the previous year, according to an Ernst and Young (EY) study.

This was on the back of 54 large deals of value greater than $100 million, strong buyout activity and investments in infrastructure and real estate asset classes. Exits recorded $4.1 billion across 77 deals, riding on a few large strategic and open market exits, it said in a statement.

“While Indian PE/VC investment activity has continued its strong performance in 1H19 (27 per cent higher than 1H18 and 30 per cent higher than 2H18), the sectoral distribution is significantly different this time around. As per EY’s forecast in the beginning of 2019, infrastructure and real estate sectors have taken the lead in attracting PE investments from marquee global investors,” Vivek Soni, Partner and National Leader Private Equity Services at EY said.

The period attracted $7.3 billion of PE/VC investments in infrastructure sector, more than 1.6 times recorded in the entire 2018 and more than the previous two years’ investments put together.

“Infrastructure investment trusts (InvITs) are finding favor with global investors, pension funds and sovereign wealth funds and with India’s maiden real estate investment trusts (REIT) paving the way for more such REIT offerings, the mood appears to be upbeat for quality commercial real estate assets,” he added.

Buyouts as a PE investment strategy has become even stronger, with the first half of the year recording the highest value and number of buyouts for any half-year period ever. Exits, however, have had a subdued performance with open market exits and initial public offers (IPOs) being impacted by the volatility in the capital markets.

On a half-yearly basis, investments during the period rose by 27 per cent in terms of value compared with last year and 30 per cent compared with the same period last year ($23.4 billion in 1H19 vs. $18.5 billion in 1H18 and $18 billion in 2H18) and is the best half-yearly performance ever.

In terms of the number of deals, the increase is higher at 43 per cent and 35 per cent compared with the first half of 2018 and 2H18, respectively (536 deals in 1H19 vs. 376 deals in 1H18 and 396 deals in 2H18). Both, the first and the second quarter of 2019 have recorded a strong growth in deal activity compared with the corresponding quarters in 2018.

The first half of 2019 saw $5.5 billion in fund raise, 85 per cent higher than first half of last year. The largest fund raise in 2019 saw Edelweiss Alternative Asset Advisors raise $1.3 billion for investment into stressed assets followed by Chrys Capital raising $850 million for its eight fund. New fund-raise plans announced during the period stood at $10 billion compared with $13.6 billion in previous period.