Inflows into Jio limit fall in H1 PE/VC investments to 10% at $18.3 bn

A flurry of deals involving Mukesh Ambani's Jio Platforms has helped arrest the fall in private equity investments into India to only 10 per cent in the first half of 2020 at $18.3 billion, a report said on Monday.

The $9.6 billion invested into Jio accounted for more than half of the overall investments by private equity and venture capital (PE/VC) funds, and if not for those, the overall activity would be much lower, EY, a consultancy, said.

Its partner Vivek Soni said it has been a very challenging time for both corporate India and investors as both sides have had to deal with their own set of uncertainties because of the Covid-19 pandemic and added that some the challenges are expected to persist.

He, however, said that the headline numbers have been far better than anticipated largely because of the deals in Jio Platforms.

In terms of volume, number of deals in January-June period declined 11 per cent from the year-ago period's 499 deals.

One of the biggest reasons for the decline in PE/VC investments in the first half was the under-performance of the infrastructure and real estate sectors which attracted the highest PE/VC investment in 2019 at $20 billion, it said, adding in the H1 this year, these sectors received only $1.9 billion in investments.

In terms of deal type, buyouts were the most affected with only 14 transactions worth $794 million compared to 27 worth $6.2 billion in the year-ago period.

Growth deals were the highest at $12.7 billion across 93 transactions, up from $6.7 billion through 111 deals in the year-ago period, followed by start-up investments at $2.7 billion by way of 266 deals versus $2.7 billion via 293 transactions.

During January-June, there were credit investments worth $1.2 billion across 40 deals, as against $1.7 billion across 39 deals and PIPE (private investment in public equity) of $882 million across 30 deals versus $3 billion across 29 deals in the year-ago period, the report said.

Exits declined by 26 per cent in terms of value to $2.9 billion in the first half of this year and if compared to H2 of 2019, the decline was even steeper at 61 per cent.

Over $1.6 billion of fundraising activity was observed in H1 which was 71 per cent lower as compared to the year-ago period.