Mumbai: Private equity (PE) and venture capital (VC) investments hit a record monthly high of $7 billion in March, growing more than twice compared to the same period last year, according to EY’s Private Equity Monthly Deal Tracker. March 2018 had witnessed PE/VC investments of $3 billion.
At $7 billion, the deal activity last month was 30% higher compared to the previous high of $5.4 billion recorded in August 2017.
The number of deals in March 2019 increased by 44% against a year ago, with 89 deals in March 2019 compared to 62 in March 2018.
There were 13 large deals (deals of value greater than $100 million) aggregating to $6 billion in March 2019, compared to four large deals worth $3 billion in March 2018, with Brookfield’s $1.9 billion buyout of RIL’s east-west pipeline being the largest deal during the month and also the largest ever in the Infrastructure sector, the report said.
As a result of the exceptionally high level of PE/VC investments in March 2019, the first quarter emerged as the best-ever quarter for PE/VC investments, with investments worth $11.4 billion, 37% higher compared to the same period last year and almost a third of the value recorded in the whole of 2018.
“The Indian PE/VC industry is off to a very strong start with $11.4 billion of PE/VC investments in Q1, eclipsing the previous Q1 high (2018) by 37% on the back of strong investment flows recorded in March 2019 at $7 billion (61% of all investments received in Q1 2019). March 2019 saw hectic deal activity both in investments and exits in infrastructure and real estate asset. With large global buyouts, sovereign and pension funds becoming more active investors in the Indian PE/VC sector, there is increasing interest in yield-generating assets (roads, pipelines, telecom infrastructure and commercial real estate). Corporates as well as government bodies are looking to monetise passive assets as seen in the Brookfield-RIL pipeline deal," according to Vivek Soni, partner and national leader, private equity services, EY.
Exit activity, however, showed signs of slowing down.
March 2019 recorded 13 exits worth $465 million, 34% lower compared to last year and the lowest monthly value of exits in 2019. The decline was mainly on account of fewer large deals. There was only one large exit worth $131 million in March 2019 compared to four large exits worth $626 million in March 2018.
Overall, in Q1 2019, PE/VC exits declined by 30% on a year-on-year basis and by 48% compared to 4Q2018 to $1.3 billion, recording the lowest quarterly value of exits in over 11 quarters.
“One notable exit event in March 2019 is the successful IPO of India’s maiden REIT offering, backed by Embassy / Blackstone consortium. This is a ‘Lighthouse Event’ for the Indian real estate private equity sector, which over the past 3-4 years, has seen significant amount of PE investment into portfolios of rent generating commercial properties such as office, retail malls and industrial warehousing. Should public market investors continue to show interest in this REIT security that represents a new asset class, it could pave the way for many more REIT listings," according to Soni.