Private equity and venture capital (PE/VC) investments worth $3.3 billion in October 2019 were on a par in the corresponding period last year ($3.3 billion), but 11.5 per cent lower compared to September 2019 (US$3.7 billion).
Total PE/VC investments in India now stand at $43.7 billion till now this year--16.5 per cent higher than the previous high of $37.5 billion recorded in entire 2018.
According to EY data, the number of deals in October 2019 recorded at 42 per cent higher deals compared to October 2018 but seven lower compared to September 2019 (91 deals in October 2019 vs. 64 deals in October 2018 and 98 deals in September 2019).
Vivek Soni, partner and national leader for private equity services at EY, said PE/VC investments in 2019 have maintained a consistent monthly run rate of over $3 billion. India already has $43.7 billion investments on a year-to-date basis and well on track to hit the 50 billion mark for the year, said Soni.
Like in previous months, the infrastructure sector has contributed a significant share to the deal value in October 2019 with over $1.4 billion in PE/VC investments. Investments in infrastructure accounted for 43% of the total PE/VC investments in October 2019 compared to 6% in October 2018.
Global buyout, pension and sovereign funds continue to take large bets in the Indian infrastructure sector and this trend is expected to remain strong in the near future. With global interest rates once again on a downward trend, steady yield-generating assets in India present a good opportunity for large global pools of capital hungry for yield, said Soni.
Infrastructure was followed by financial services ($832 million) and technology ($278 million) were the top three sectors in terms of PE/VC investments in October 2019.
Exits have been fairly muted for most of 2019 due to the subdued sentiment in the capital markets. In 2019, year-to-date exits aggregated $9.1 billion compared to $26 billion over the same period last year.
October 2019 recorded 14 exits worth $960 million, 30% lower than the value of exits recorded in October 2018 ($1.4 billion) and 64 per cent lower than September 2019 ($2.6 billion) which had recorded the large $1.5 billion partial buyback by Oyo’s founder.
In October 2019, open market exits were highest at $878 million across eight deals, accounting for 91 per cent of total exits by value. October 2019 recorded the highest monthly value of open market exits in two years. There was no PE-backed Initial Public Offering (IPO) in October 2019.
The largest exit in October 2019 saw Fairfax sell its 9.9 per cent stake in ICICI Lombard General Insurance Company Limited in the open market for $732 million.
Financial services ($875 million across six deals) was the top sector in October 2019, accounting for 91% of all exits by value.
On the remaining months, Soni, said, 2019 is expected to be one of the better investment vintages for the Indian PE/VC industry. However, uncertainties around US-China trade talks and global as well as domestic growth could dampen the sentiment in the short-term. Nonetheless, LP and GP interest in India’s long-term growth prospects remains intact.