India attracted $45 billion in private equity and venture capital investment spread across more than 1,000 deals in 2019, thereby continuing to remain the second-largest deal market in Asia-Pacific during the year, according to a report by IVCA-Bain & Company released on Wednesday.
The increase in investment, as much as 70% over 2018, was primarily led by a rising number of large deals amounting to over $100 million, an uptick in their average deal size and a surge in VC investments, analysts said in the report. India’s share of the APAC deal market grew to nearly 25% in 2019.
Of the top 15 deals in the country, which constituted over 35% of the total investment value in 2019, five were in real estate, three in IT and ITES, with the rest spread across banking, financial services and insurance (BFSI), telecommunications, energy and consumer technology, the report said. While BFSI attracted about $8.4 billion in investments, consumer technology mopped up $7.7 billion in 2019. Two large deals — Reliance Jio Infratel and Bharti Airtel, helped boost the telecom sector, according to the report.
“From an investment perspective, we will likely see a short-term dip in investment activity with Covid-19, as already evidenced globally. Investors need to triage their portfolio and take actions to adapt to the changes in the economy,” said Arpan Sheth, partner at Bain & Company. The market disruption caused by Covid-19 could lead to growth in select pockets such as e-commerce, enterprise technology/SaaS, healthcare and on-demand services, Sheth said.
The report said that exit value in 2019 decreased, finishing at nearly $13 billion, compared to $17 billion in 2018 (excluding Flipkart’s exit) but was still the third-highest for the last decade.
Analysts noted that SaaS and cross-sector technologies are the most attractive opportunities in the next three to five years. The Indian SaaS market is expected to grow around 50% annually from $6 billion in 2019 to over $20 billion in 2022. Fintech continues to be the largest cross-sector technology segment in India, both in terms of deal value and volume, growing from $0.7 billion worth of investments in 2018 to $2.4 billion in 2019, the report said.