BackPE/VC funding more than doubles to $4.8 billion in November
Robust inflows into infra, real estate sectors have driven investment growth this yearMost investments in November flowed into finserv, followed by life sciences, and media/entertainment
PremiumMumbai: Private equity (PE) and venture capital (VC) investments in India more than doubled to $4.8 billion in November from $1.8 billion in the year earlier, according to a report by the Indian Private Equity and Venture Capital Association and consulting firm EY.
In the 11 months to 30 November, PE/VC investments in the country rose to $44.2 billion, 18% more than the previous high of $37.4 billion recorded in 2018.
“PE/VC investments in 2019 have clocked over $44 billion till date and could end up at $48-50 billion mark for the year. This is a very significant figure, with PE/VC investments at 1.7-1.8% of GDP, we are almost on a par with China and the global average for PE/VC investments to GDP ratio," said Vivek Soni, partner and national leader (private equity services) EY.
“A significant part of the growth in 2019 has come from the robust investment flow in the infrastructure and real estate sectors (one-third of all investments in 2019), 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 like InvITs and REITs by the Indian government," he added.
In terms of volume, November saw 94 deals compared to 68 deals in the year-ago period. While most investments flowed into the financial services sector at $1.9 billion, the life sciences sector got $1.2 billion—the sector’s highest ever value of PE/VC investments recorded in a month. The third highest investments were into media and entertainment at $631 million.
The number of large deals (value greater than $100 million) also went up, with November recording 12 large deals worth $3.8 billion, compared to just five large deals worth $950 million in November 2018.
The largest deals announced in November include Alibaba Group’s and Softbank’s $1 billion investment in Paytm, followed by $627 million in Zee Entertainment Enterprises Ltd by a group of investors, including GIC and Morgan Stanley, and Unison Capital Partners’ buyout of Kyowa Pharmaceutical Industry (Lupin’s Japan business) for $525 million from Lupin Ltd.
The value of PE/VC exits, too, doubled with November witnessing 15 exits worth $1.4 billion, compared to 11 exits worth $676 million in the year-ago period. The growth was primarily because of two large open market deals accounting for $1 billion of total exits in November—Bain Capital’s and GIC’s sale of their combined stake of 14.6% in Genpact Ltd for $625 million, followed by Carlyle selling its 3% stake in SBI Life Insurance Co. Ltd for $393 million.
“While exits have been subdued for most of 2019 with year-to-date exits aggregating to $10.5 billion compared to $27 billion in the same period last year, activity has picked up slightly with the revival of deals in the open market on the back of improvement in capital market sentiment," said Soni.
Open market exits were the highest in the last two years during the month at $1.1 billion across five deals, accounting for 82% of total exits by value. While open market exits saw a revival in conjunction with improvement in capital market performance, there were no PE-backed initial public offerings (IPOs) for three consecutive months since August.
However, fundraising by PE/VC firms more than halved during the month to $172 million, compared to $398 million in November 2018.
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