August PE/VC flows up 13% YoY to $4.4 bn; infra, realty grab 35% share

16 large deals with value over $100 mn each were recorded, aggregating to $3.3 bn, compared to six such deals worth $3.3 bn a year ago

Private Equity/Venture Capital investments in August 2019 rose 13 per cent to $4.4 billion from $3.9 billion a year ago, but were 47 per cent lower than the July 2019 figure of $8.5 billion, the highest monthly value of investments on the back of the large $3.7 billion Brookfield-Reliance Jio deal.

Total PE/VC investments in India now stand at $36.7 billion, surpassing the previous high of $36.5 billion in 2018, according to EY data.

The number of deals this August stood at 82, up 39 per cent on a year-on-year, but 27 per cent lower compared to the July 2019 figure of 112 deals.

Infrastructure ($803 million), real estate ($764 million) and financial services ($734 million) took the lion's share of PE/VC investments this August, with inflows into infrastructure and real estate making up 35 per cent of the total, compared to about 23 per cent a year ago.

August 2019 recorded 16 large deals (value greater than $100 million) aggregating to $3.3 billion compared to six large deals worth $3.3 billion last August and 14 large deals worth $7 billion in July 2019. Five of the 16 largest deals in August 2019 were in infrastructure and real estate sectors, aggregating $1.6 billion. GIC’s $631 million investment in IRB Infra’s road platform was the largest deal in August 2019 followed by Blackstone’s buyout of Coffee Day’s Global Village Tech Park for $400 million.

Vivek Soni, Partner and National Leader Private Equity Services, EY said that as predicted at the beginning of the year, Indian PE/VC investment activity in 2019 has surpassed the all-time high of $36.5 billion recorded in 2018. PE/VC investments in the first eight months of 2019 have breached the $36.7 billion level, and given the deal momentum in various sectors, by the end of 2019, the total Indian PE/VC investment could potentially be in the range of $48 billion to $50 billion.

Large investments in the infrastructure sector, which has accounted for 35 per cent of all PE/VC investments in India in 2019, have added real momentum to the Indian PE/VC investment activity. The infrastructure theme has witnessed interest from global buyout, pension and sovereign funds and this trend is expected to remain strong in the near-term. With both the Government as well as the private sector looking to monetise assets, we expect many more quality yield-generating assets to exchange hands, either directly or through InvIT structures.

While domestic factors like growth slowdown, tight liquidity, market sentiment and currency depreciation add to the prevailing uncertainty, seasoned PE investors are expected to forge ahead strongly.

"We continue to believe that 2019 could be one of the better investment vintages for the Indian PE/VC industry as notwithstanding the bumpy outlook in the short-term, LP and GP interest in India’s long-term growth prospects remains intact,” said Soni.

In terms of deal type, growth deals recorded the highest value of investments in August 2019 at $1.6 billion across 20 deals, compared to 14 deals worth US$1.8 billion in August 2018 followed by start-up investments worth $1.4 billion across 50 deals ($ 182 million across 32 deals in August 2018) and buyouts at $1.1 billion across six deals ($1.7 billion across five deals in August 2018).