- At US$698 million, credit investments record an increase of over 20 times compared to last year
- At US$898 million, infrastructure sector receives largest amount of PE/VC investments
- Strategic exits, at US$293 million, are the highest, accounting for 63% of all exits by value
Mumbai, 25 February 2020: According to the IVCA-EY monthly PE/VC roundup, January 2020 recorded investments worth US$2.5 billion across 83 deals, with investments of US$898 million in the infrastructure sector. Exits recorded US$461 million across 12 deals, 39% higher compared to last year.
Vivek Soni, Partner and National Leader - Private Equity Services, EY said, “After a record setting 2019, PE/VC investments in 2020 are off to a good start with investments worth US$2.5 billion recorded in January 2020, a growth of 34% y-o-y. As projected by us, infrastructure sector continues to play a big role in this growth, accounting for 36% of all PE/VC investments during the month.
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.”
Investments
PE/VC investments in January 2020 (US$2.5 billion) were 34% higher than the value recorded in January 2019 (US$1.9 billion) and 41% lower compared to December 2019 (US$4.3 billion). In terms of volume, number of deals in January 2020 were at par with January 2019.
The improved performance in January 2020 is primarily on the back of increase in the value of credit investments. Credit investments increased more than 20 times in January 2020 to US$698 million. This is also the highest value of PE/VC backed credit investments in a month in over two years.
In terms of deal type, in January 2020, growth capital deals were the highest in value with US$968 million recorded across 13 deals (at par with US$976 million in January 2019). January 2020 recorded start-up investments worth US$533 million across 54 deals, 55% higher y-o-y (US$345 million) and PIPE investments worth US$232 million (US$3 million in January 2019). Buyouts recorded the lowest value of investments at US$71 million across three deals compared to US$504 million across four deals in January 2019.
There were five large deals (value greater than US$100m) worth US$1.4 billion in January 2020 compared to four deals worth US$1.1 billion last year. The largest deal announced in January saw Goldman Sachs and Varde Partners take over the debt of RattanIndia Power Limited for US$566 million followed by Canada Pension Plan Investment Board (CPPIB), Allianz Capital Partners and Ontario Municipal Employees Retirement System’s (OMERS’) US$246 million investment in IndInfravit Trust.
From a sector point of view, infrastructure sector (US$898 million across five deals) was the top sector in January 2020, followed by financial services (US$531 million across 14 deals) and e-commerce (US$264 million across nine deals).
Exits
January 2020 recorded 12 exits worth US$461 million, 39% higher than the value of exits recorded in January 2019 (US$331 million) but 47% lower than December 2019 (US$864 million).
The largest exit in January 2020 saw Nexus India Capital Advisors, Jungle Ventures and Naspers sell their combined stake in Paysense Services India Private Limited to PayU Corporate for US$293 million.
In January 2020, strategic exits were highest at US$293 million across two deals, accounting for 63% of total exits by value and the highest monthly value of strategic exits in over six months. These were followed by open market exits that recorded exits worth US$144 million across six deals.
Financial services sector (US$328 million across four deals) was the top sector in January 2020, accounting for 71% of all exits by value.
Fund raise
January 2020 recorded total fund raises of US$742 million compared to US$2.5 billion raised in January 2019, which had seen the large US$1.3 billion stressed asset fund being raised by Edelweiss’ alternative investment arm. The largest fund raise in January 2020 saw EQT and Temasek fund a US$500 million JV, O2 Power, to invest in renewable energy projects. January 2020 also saw fund raise plans worth US$4.1 billion being announced compared to US$200 million last year.
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Notes to Editors
About EY
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This news release has been issued by EY Services Limited, a member of the global EY organization that also does not provide any services to clients.
About IVCA
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.
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