Chennai: Pumping in $48 billion into the Indian market, private equity and venture capital (PE/VC) funds made a new high in 2019. The investments were equivalent to 1.7 per cent of the country’s GDP.
From the previous high of $37.4 billion in 2018, PE/VC funds have made an impressive growth of 28 per cent to touch a new high in 2019—$48 billion across 1037 deals, as per the IVCA-EY monthly roundup.
“2019 was third consecutive record-breaking year for PE/VC investments in India. At $48 billion, PE/VC investments equated to approximately 1.7 per cent of the GDP, which is similar to the Chinese benchmark in 2018. Private capital investments in India have grown at a CAGR of almost 44 per cent over the past three years and this asset class now appears to have come of age in India,” said Vivek Soni, partner and national leader-private equity services, EY.
Among the largest deals of the year were Brookfield’s buyouts of Reliance Jio’s tower arm for $3.7 billion and Reliance Industries’ East-West pipeline for $1.9 billion. Brookfield-Reliance Jio’s tower deal was also the largest ever in the Indian PE/VC industry.
“The fact that the PE investment tally of 2019 outdid the previous high of 2018 despite uncertainties on the economic, political and global trade fronts is very encouraging,” said Arun Natarajan, founder of Venture Intelligence.
Infrastructure was the top sector in terms of funding. The sector received $14.5 billion— more than 200 per cent growth over $4.5 billion in 2018. Infrastructure acc-ounted for 30 per cent of the total deal value. PE/VC investment activity in the financial services sector has recorded healthy growth. At $9.1 billion, PE/VC investments in the financial services sector were up by 20 per cent over the previous year.
Calendar year 2019 also saw heightened activity in buyouts. For the first time, buyouts emerged as the primary PE/VC deal type, overtaking growth capital deals and accounting for 34 per cent of all PE/VC investments by value.
While investments grew, exits saw a declining trend. The past year recorded 156 PE/VC exits worth $11.5 billion—a decline of 58 per cent from $27 billion in 2018. PE/VC exits in 2018 included the country’s largest ever PE/VC exit through the $16 billion Walmart-Flipkart deal. If this deal is excluded, PE/VC exits in 2019 have increased by 4 per cent.
“Going forward...we expect investment growth to slow down to about 15-20 per cent in 2020,” said Soni.