Private Equity/Venture Capital investments in January 2020 grew by 34 per cent in value terms to $2.5 billion from $1.9 billion in January 2019. In terms of volume, number of deals in January 2020 was at par with that of January 2019.
The improved performance in January 2020 is primarily on the back of increased value in credit investments, which rose over 20 times to $698 million, according to IVCA-EY monthly PE/VC roundup. This is also the highest value of PE/VC backed credit investments in a month in over two years.
Credit investments are also a fast-emerging asset class for PE/VC as seasoned investors cherry-pick stressed opportunities thrown up by companies that need support to prevent going into NCLT. With a more enabling regulatory and policy framework in place, credit investments are off to a good start in January 2020. Globally, credit/stressed asset or special situation investing forms an important part of the multi-asset class strategy followed by large funds. We expect this asset class to increase significantly in value in 2020 as the PE/VC industry gears up to play a meaningful role in helping resolve part of India’s stressed asset problem by providing much-needed risk capital.
Growth capital deals were the highest in value with $968 million recorded across 13 deals (at par with $976 million in January 2019). Start-up investments stood at $533 million across 54 deals, 55% higher y-o-y ($345 million) and PIPE investments worth $232 million ($3 million in January 2019). Buyouts recorded the lowest value of investments at $71 million across three deals compared to $504 million across four deals in January 2019.
Infrastructure sector ($898 million across five deals) was the top sector in January 2020, followed by financial services ($531 million across 14 deals) and e-commerce ($264 million across nine deals).