- Infrastructure sector recorded US$1.4 billion in PE/VC investments, accounting for 43% of all PE/VC investments in October 2019 as compared to 6% in October 2018
- Open market exits are at a two year high of US$878 million in October 2019
According to the IVCA-EY monthly PE/VC roundup, October 2019 recorded investments worth US$3.3 billion across 91 deals, with investments of US$1.4 billion in infrastructure. Exits recorded US$960 million across 14 deals on the back of a pick-up in open market exits.
Vivek Soni, Partner and National Leader Private Equity Services, EY said,
“PE/VC investments in 2019 have maintained a consistent monthly run rate of over US$3 billion and October was no different. We are already at US$43.7 billion on a year-to-date basis and well on track to hit the US$50 billion mark for the year.
Like in previous months, the infrastructure sector has contributed a significant share to the deal value in October 2019 with over US$1.4 billion in PE/VC investments. 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.
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 US$9.1 billion compared to US$26 billion over the same period last year. However, if we adjust for the large US$16 billion Walmart-Flipkart deal, the underperformance in PE/VC exits is not significant.
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.”
PE/VC investments in October 2019 (US$3.3 billion) were at par with October 2018 (US$3.3 billion), however were 11.5% lower compared to September 2019 (US$3.7 billion). The total PE/VC investments in India, year-to-date, now stand at US$43.7 billion, which is 16.5% higher than the previous high of US$37.5 billion recorded in entire 2018. For number of deals, October 2019 recorded 42% higher deals compared to October 2018 but 7% lower compared to September 2019 (91 deals in October 2019 vs. 64 deals in October 2018 and 98 deals in September 2019).
From a sector point of view, infrastructure (US$1.4 billion), financial services (US$832 million) and technology (US$278 million) were the top three sectors in terms of PE/VC investments in October 2019. Investments in infrastructure accounted for 43% of the total PE/VC investments in October 2019 compared to 6% in October 2018.
October 2019 recorded five large deals (value greater than US$100 million) aggregating US$2.2 billion compared to seven large deals worth US$2.7 billion in October 2018 and 11 large deals worth US$2.6 billion in September 2019. The largest deals announced in October 2019 was in the infrastructure sector – Abu Dhabi Investment Authority (AIDA), Public Sector Pension Investment Board (PSP Investments), and National Investment and Infrastructure Fund’s (NIIF) US$1.1 billion investment in GVK Airport Holdings Limited (announced).
In deal type, growth deals recorded the highest value of investments in October 2019 at US$1.7 billion across 16 deals, compared to 15 deals worth US$1.9 billion in October 2018 followed by start-up investments worth US$717 million across 64 deals (US$281 million across 33 deals in October 2018) and buyouts at US$500 million across five deals (US$941 million across five deals in October 2018).
October 2019 recorded 14 exits worth US$960 million, 30% lower than the value of exits recorded in October 2018 (US$1.4 billion) and 64% lower than September 2019 (US$2.6 billion) which had recorded the large US$1.5 billion partial buyback by Oyo’s founder.
In October 2019, open market exits were highest at US$878 million across eight deals, accounting for 91% 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% stake in ICICI Lombard General Insurance Company Limited in the open market for US$732 million.
Financial services (US$875 million across six deals) was the top sector in October 2019, accounting for 91% of all exits by value.
October 2019 recorded total fund raises of US$403 million compared to US$641 million raised in October 2018. Xander’s US$250 million platform for investments in the industrial realty (logistics and e-commerce) sector was the largest fund raise in October 2019.
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The Indian Private Equity & Venture Capital Association (IVCA), is the apex body promoting the Alternative Investment Funds (AIFs) in India and promotes stable, long-term capital flow (Private Equity (PE), Venture Capital (VC) and Angel Capital) in India.
With leading VC/ PE firms, institutional investors, banks, corporate advisers, accountants, lawyers and other service providers as members, it serves as a powerful platform for all stakeholders to interact with each other. Being the face of the Industry, it helps establish high standards of governance, ethics, business conduct and professional competence.
With a prime motive to support the ecosystem, it facilitates contact with policy makers, research institutions, universities, trade associations and other relevant organizations. Thus, support entrepreneurial activity, innovation and job creation.