At $45 bn, India's PE/VC investment in 2019 highest in over 10 yrs: Report

India's share in the Asia-Pacific deal market increased to nearly 25 per cent in 2019 and the investment value was about 70 per cent higher than in 2018

India continued to be the second-largest deal market in Asia-Pacific (APAC) in 2019. The region drew a record amount of venture capital investments witnessing an increase in the number and average deal value of more than $100 million, the highest in the last decade, to the tune of $45 billion from 1,053 deals during the year, according to the Bain & Company’s annual India Private Equity Report 2020.

India’s share in the APAC deal market increased to nearly 25 per cent in 2019 and the investment value was about 70 per cent higher than in 2018 and nearly 110 per cent higher than the previous five-year average. The top 15 deals in India, which constituted more than 35  per cent of total investment value in 2019, include five from real estate; three in IT and ITES; and the rest across BFSI, telecommunications, energy, and consumer technology. Notable large investments in 2019 included stakes in Reliance Jio Infratel, Pipeline Infrastructure, Axis Bank, GMR Airports, GVK Airport Holdings, and Paytm.

Arpan Sheth, partner, Bain & Company, and one of the lead authors of the report said: “From an investment perspective, we will likely see a short-term dip in investment activity with Covid-19, as already evidenced globally. However, this imminent price correction across the board will present an investment opportunity. Investors need to triage their portfolio and take actions to adapt to the changes in the economy which includes taking immediate actions to ensure business continuity and plan for value creation to retool their businesses for the future. The market disruption caused by Covid-19 could lead to growth in select pockets such as e-commerce, enterprise technology/SaaS, healthcare, on-demand services.”

The report said that the exits in 2019 decreased, finishing at nearly $13 billion, relative to the previous two years. Yet, it was the third-highest exit year of the last decade at $12.8 billion. The fall over last year's $17 billion (excluding Flipkart) was driven by a decrease in the number of exits from 265 to 200. With an unpredictable public market, strategic sales became the preferred mode of exit, accounting for about 50 per cent of exit volume. According to Bain’s analysis, there will be a short-term dip in investment activity with Covid-19, as already evidenced globally. However, price correction across the board will present an investment opportunity.

The report added that Software as a Service (SaaS) and cross-sector technologies will be the most attractive opportunities for investors in the future, expected to grow around 50 per cent annually from nearly $6 billion in 2019 to over $20 billion in 2022. The investment value in SaaS rose to $1.3 billion, a 60 per cent increase over the last year’s $840 million.