Indian private equity and venture capital (PE/VC) investments rose 27% compared to the previous year, in the first of 2019 to cross the $23 billion mark, according to a report from auditing and consultancy firm EY.
The dealmaking increased 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.
While pure play PE/VC investments in the first half at $12.3 billion have been at investment levels similar to those recorded in the same period last year ($12.8 billion), investments in the infrastructure and real estate sectors during the period are 23% higher compared to investments made in entire 2018. These two asset classes have together accounted for 48% of all PE/VC investments in the period compared to 30% in the first half of 2018 and 19% in the second half of 2018.
“While Indian PE/VC investment activity has continued its strong performance in 1H19 (27% higher than 1H18 and 30% higher than 2H18), the sectoral distribution is significantly different this time around. 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," said Vivek Soni, Partner and National Leader Private Equity Services, EY.
The largest deals in the period saw Canadian investment firm Brookfield’s buyout of Reliance Industries Limited’s (RIL’s) East-West pipeline worth $1.9 billion and Brookfield buying out four hotel assets from Hotel Leela Ventures Limited for $572 million.
The first half of 2019 also saw $5.5 billion in fund raise, 85% higher compared to 2018’s first half. The largest fund raise saw Edelweiss Alternative Asset Advisors raise $1.3 billion for investment into stressed assets followed by ChrysCapital raising $850 million for its eight fund. New fundraise plans announced stood at $10 billion compared to $13.6 billion in the first half last year.
However, while investments and fundraises increased, exits declined 26% in terms of value, from $5.5 billion to $4.1 billion this year, and 24% in terms of volume, from 101 deals in 2018 to 77 this year.