Private capital investments in India at all-time high in 2019; infra, startups attract most fund, says report

Private Equity and venture capital investment in India were at all-time high, in terms of both value and volume, in 2019, jumping more than 35 over last year, according to a report.

The record private capital investments were on the back of large investments in infrastructure.

According to an IVCA-EY report, released on Thursday, 2019 recorded $48 billion investments across 1,037 deals. Of the total capital, $14.5 billion was put in infrastructure sector.

IVCA-EY is an association representing the interests of country’s private equity and venture capital industry.

In terms of volume, there were 769 deals in 2018, 60 percent of which were in the startup space.

In terms of number of deals, startups recorded a 61 percent increase in deal activity in 2019 compared to last year (378 deals in 2018).

There were 156 exit deals of $11.5 billion on the back of a pick-up in open market exits, it said.

Infrastructure sector capital inflow accounted for 30 percent of all PE/VC investments. For the first-time, buyouts emerged as the largest deal type, accounting for over one-third of the capital.

Investments in the infrastructure and real estate asset classes recorded an increase of 225 percent and 33 percent, respectively, compared to 2018 amount.

Vivek Soni, private Equity Services partner at EY said: “2019 was the third consecutive record-breaking year for PE/VC investments in India. At ~US$48 billion, PE/VC investments equated to approx. 1.7 percent of India’s GDP, which is similar to the Chinese benchmark in 2018.”

Private capital investments in India have grown at a CAGR of almost 44 percent over the past three years, and this asset class now appears to have come of age in India, he said.

“We expect 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,” Soni said.

IVCA-EY report, however, said investment growth to slow down to about 15-20 percent in 2020.

(Note: The data includes deals that are announced but are awaiting)