4 minute read 26 Feb 2020
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Credit investments are a fast-emerging asset class for PE/VC investments

By Vivek Soni

EY India Private Equity Leader

Strategic thinker and leader. More than 22 years of experience in M&A advisory, Private Equity investing, structured finance and running a PE portfolio company. Passionate biker and avid traveler.

4 minute read 26 Feb 2020
Related topics Private equity

PE/VC investments record a strong start in January 2020, with a 34% increase over last year

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.

After a record setting 2019, PE/VC investments in 2020 are off to a good start with investments worth US$2.5 billion in January 2020.
Vivek Soni
EY India Private Equity Leader
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 Rattan India 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. 

Summary

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 India in 2020.

About this article

By Vivek Soni

EY India Private Equity Leader

Strategic thinker and leader. More than 22 years of experience in M&A advisory, Private Equity investing, structured finance and running a PE portfolio company. Passionate biker and avid traveler.

Related topics Private equity