Private equity and venture capital (PE-VC) investments fell by a marginal 8 per cent during January-November to $41.4 billion across 852 deals, on the back of the $17.3 billion raised by Reliance group companies.
Reliance group entities accounted for 42 per cent of all PE-VC investments during the reporting period, while $4.9 billion-exits were recorded across 129 deals. The number of deals for the period fell by 11 per cent compared to same period last year (953 deals in 2019), according to a report by Indian Private Equity & Venture Capital Association and EY (IVCA-EY).
“Due to large investments in the group entities of Reliance Group (Jio Platforms and Reliance Retail) during the second quarter and second-half of 2020, headline numbers for PE-VC investments in 2020 till date have been far better than anticipated. However, if we were to exclude the Reliance group entity deals, PE-VC investments in 2020 till date are at $24.1 billion, 46 per cent lower than the same period last year,” Vivek Soni, Partner and National Leader Private Equity Services at EY, said.
The under-performance of the infrastructure and real estate sectors, which had attracted the highest PE-VC investment of $18.8 billion in 2019 for the same period ($20 billion for the full year), was one of the biggest reasons for the decline in PE-VC investments in 2020.
In 2020, these sectors received only $7.8 billion in investments till date, accounting for just 19 per cent of total PE-VC investments. This also resulted in a sharp decline of buyout activity, which fell by 46 per cent in terms of value and 40 per cent in volume.
Sectors focussed on essential goods and services like pharmaceuticals, telecom, digital technology, edtech received a major chunk of the investments.
Start-up investments, too, declined by 40 per cent to $4.5 billion across 530 deals ($7.5 billion across 560 deals during January-November 2019). Private Investment in public equity (PIPE) deals declined by 41 per cent to $2.9 billion across 53 deals ($4.9 billion across 55 deals during January-November 2019). Credit investments declined by 10 per cent to $2.5 billion across 71 deals ($2.8 billion across 69 deals during January-November 2019).
Exits during the reporting period fell by 53 per cent in value ($4.9 billion versus $10.3 billion in 2019) and is the lowest value in six years for the period under consideration. In terms of volume, exits declined by 13 per cent compared to 2019 (129 deals in 2020 versus 148 deals in 2019). The decline was mainly due to fewer large deals.
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The period saw $5.9 billion in fundraise, which was 31 per cent lower compared to same period last year ($8.5 billion in 2019). There were only 12 fund raises of over $100 million, compared to 25 in the same period last year. The largest fund-raise in 2020 saw Sequoia raise a $1.4-billion venture fund for investments in India and South-East Asia followed by Edelweiss Asset Management’s $900-million fundraise for structured debt investments.