Indian PE/VC investments close at all-time high of $47.6 billion in 2020: Report

By: |
March 20, 2021 12:45 AM

Infrastructure sector investments dipped to as much as $4.9 billion last year from $13.8 billion in 2019. Consequently, there has been a sharp decline in buyout activity, which recorded a decline of 28% in terms of value and 30% in terms of volume.

fund18 PE investments during Q1 2021 were worth $100 million or more in comparison to 14 such deals during the year-ago period. (Representational image)

Indian private equity (PE) and venture capital (VC) investments touched a record $47.6 billion last year on the back of a spate of deals closed by Jio Platforms and Reliance Retail, showed a joint report published by Indian Private Equity & Venture Capital Association (IVCA) and EY on Friday.

However, excluding the PE investments worth $17.3 billion bagged by the Reliance Group entities, the total PE/VC funding garnered by companies in 2020 stands nearly 36% lower compared to 2019. In fact, investments in the first two months of the year have been rather sluggish. Funding in the January-February period stood 11% lower year-on-year at $3.72 billion.

“The pandemic has led to the rapid adoption of technology. Sectors like edtech, life sciences, technology and some sub-sectors of financial services have demonstrated resilience to the disruptions caused by the pandemic and ensuing lockdowns and thus gained prominence over the traditionally favourite sectors for PE/VC investors like infrastructure, real estate,” analysts said in the report.

Infrastructure sector investments dipped to as much as $4.9 billion last year from $13.8 billion in 2019. Consequently, there has been a sharp decline in buyout activity, which recorded a decline of 28% in terms of value and 30% in terms of volume.

Although there were merely 66 (excluding Reliance) deals of over $100 million as against 108 in 2019, given that investor sentiment remained subdued for almost a third of the year, sectors like technology, pharmaceuticals, edtech and enterprise SaaS fared well. Going forward into the new decade, analysts expect “these new favourites to continue attracting higher than before PE/VC investments”.

“Based on recent trends, early movers in technology-enabled business are expected to corner a disproportionate share of the market. As such, companies that are on the forefront of technology will most likely have the competitive advantage, and PE/VC funds are realising that,” they said.

In percentage terms, start-up investments recorded the steepest decline of 40% year-on-year to $4.8 billion across 557 deals in 2020. Investments in the sector stood at $7.9 billion in 2019. Overall deal activity, though, picked up significantly in the last quarter of the year. Investments during the period stood at $18.5 billion compared to $10.9 billion in Q42019.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Aircel, RCom lenders may challenge NCLAT order on spectrum as they may lose Rs 60,000 crore
2Zoho’s Sridhar Vembu gives growth mantra to SMBs; suggests entrepreneurs to focus on rural India
3PM SVANidhi: 84% sanctioned loans disbursed to street vendors since launch of scheme; SBI top lender