Infrastructure drives record PE/VC investments in 2019: IVCA-EY report

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Updated: January 24, 2020 6:56:15 AM

It also said that, for the first time, buyouts have emerged as the primary PE/VC deal type, overtaking growth capital deals and accounting,for 34% of all PE/VC investments by value in 2019.

infrastructure sector, PE/VC investments, IVCA, real estate asset, Brookfield-Reliance Jio tower deal, Indian PE/VC industryPE/VC exits in 2018 included $16-billion Walmart-Flipkart deal, India’s largest ever PE/VC exit.

The year 2019 recorded a record year for PE/VC investments on the back of large investments in infrastructure sector, said the IVCA-EY monthly PE/VC roundup. The report said that 2019 recorded investments worth $48 billion across 1,037 deals, with investments of $14.5 billion in infrastructure sector. Exits recorded $11.5 billion across 156 deals on the back of a pick-up in open market exits, it
said.

“PE/VC investments in 2019 were at an all-time high in terms of both value and volume. In terms of value, at $48 billion, PE/VC investments in 2019 grew by 28% over last year, mainly on account of significant investments in the infrastructure sector, which alone accounted for 30% of all investments by value in 2019 compared to 12% in 2018,” the report said.

From an asset class perspective, pure play PE/VC investments recorded a decline of 3% while there was a significant increase in investments in the infrastructure and real estate asset classes which recorded an increase of 225% and 33%, respectively, on a year-on-year basis.

It also said that, for the first time, buyouts have emerged as the primary PE/VC deal type, overtaking growth capital deals and accounting,for 34% of all PE/VC investments by value in 2019. “The largest deals during the year saw Brookfield buyout Reliance Jio’s tower arm for $3.7 billion and Reliance Industries’ East-West pipeline for $1.9 billion. The Brookfield-Reliance Jio tower deal was also the largest ever deal in the Indian PE/VC industry,” the report said.

From a sector point of view, most of the sectors recorded significant increase in PE/VC investments. In 2019, 10 sectors recorded over $1 billion in PE/VC investments compared to nine in 2018. In 2019, infrastructure sector recorded the highest value of investments at $14.5 billion.

The report further said that 2019 recorded 156 PE/VC exits worth $11.5 billion, a decline of about 58% from 2018. PE/VC exits in 2018 included $16-billion Walmart-Flipkart deal, India’s largest ever PE/VC exit. Adjusting for this one-off deal, PE/VC exits in 2019 have increased by 4%, it said.

Vivek Soni, partner and national leader-PE services, EY, said he expects 2020 to be a good year for exits because a huge stock of small and mid-cap companies has built up over the past 18 months where PE/VC investors have a substantial stake. “Whether or not an IPO window opens, we expect to see more secondary deals in 2020. By our estimates, with close to $50 billion in dry powder waiting to be deployed in India, the long-term growth story of Indian PE/VC market remains positive,” he said.

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