The buyout deals in real estate and infrastructure sectors were 2.5 times of other asset classes, said a new report by audit and consulting firm EY and the Indian Venture Capital & Private Equity Association (IVCA.)
In 2019 , buyouts in real estate and infra were $11.6 billion while in other assets it stood at $4.6 billion. “While consistent growth in buyouts has been a major driver of the overall growth of PE/VC investments for the past three years , there was a slight difference in nature of the deals in 2019. Unlike in 2017 and 2018, where the growth in buyout activities was in traditional PE/VC asset class, 2019 saw growth in infrastructure and real estate asset classes,” it said.
In 2019, 59 per cent of total value of investments in real estate was buyouts, it said. In 2019, investments in real estate went up by 33 per cent at $6.1 billion. “A large portion of them were buyout deals which is a significant divergence from the earlier trend, where a large number of investments in real estate sector were credit investments,” the report said.
According to the report, buyouts in real estate have risen from 0.4 per cent in 2015 to 3.6 per cent in real estate deals.
In 2016, 2017, and most of 2018, large number of investments in real estate were driven by credit platforms funding residential and commercial developments, capitalising on lack of traditional modes of funding for the real estate sector, which was a fallout of the rising bank NPAs and liquidity constraints in NBFC sector.
“However this trend started shifting towards buyouts in 2018 and 2019 with the likes of Blackstone and other large buyout funds lapping up portfolios of premium yield generating assets across commercial, retail, warehousing and industrial real estate segments,” it said.