Real estate sector propels PE/VC deal activity in October, says report

Realty sector bets have helped in doubling the overall private equity and venture capital investments in October to USD 8.4 billion, a report said on Thursday.

Overall venture investments had stood at USD 3.2 billion in the year-ago period and USD 4.4 billion in the preceding September month, a report by EY, a consultancy, said.

Real estate sector had two deals of over USD 1 billion each in the commercial space to take the overall inflows in the sector to USD 3.7 billion, while USD 3.3 billion came as part of equity dilution by Mukesh Ambani-led Reliance Industries in its retail arm, it said.

From a year-to-date perspective, the first ten months of the year have seen deals of USD 37.5 billion, which is 5 per cent lower than the same period last year.

"However, investments in Reliance Group entities account for 40 per cent of these investments. Excluding this outlier, the PE/VC investments are 43 per cent lower than the same period last year," its partner Vivek Soni said.

He said we are still not out of the woods as yet and there are still concerns on global growth outlook despite the US elections outcome as countries in the European region are going into the second round of lockdowns.

"We expect Indian PE/VC investing activity to remain circumspect and overweight towards larger transactions involving high quality assets in select sectors," he said.

Private equity exits have witnessed a slowdown. October witnessed muted activity with only nine deals of USD 288 million mainly supported by open market activity, the firm said.

On the back of Edelweiss Asset Management's USD 900 million fundraise, the total dry powder for future investments went up three times to USD 1.5 billion in October as compared to the year-ago period, it said.

Dry powder refers to cash reserves that private equity funds have on hand to deploy when an attractive investment opportunity arises.