Infrastructure sector investments dipped to the maximum amount of $4.9 billion last year from $13.8 billion in 2019. Consequently, there has been a pointy decline in buyout activity, which recorded a decline of 28% in terms of usage and 30% in terms of volume.
Indian private equity (PE) and risk capital (VC) investments touched a record $47.6 billion last year on the rear of a spate of deals closed by Jio Platforms and Reliance Retail, showed a joint report published by Indian Private Equity & risk capital Association (IVCA) and EY on Friday.
However, excluding the PE investments worth $17.3 billion bagged by the Reliance Group entities, the entire PE/VC funding garnered by companies in 2020 stands nearly 36% lower compared to 2019. In fact, investments within the first two months of the year are rather sluggish. Funding within the January-February period stood 11% lower year-on-year at $3.72 billion.
“The pandemic has resulted in the rapid adoption of technology. Sectors like tech, life sciences, technology and a few sub-sectors of monetary 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, land,” analysts said within the report.
Infrastructure sector investments dipped to the maximum amount of $4.9 billion last year from $13.8 billion in 2019. Consequently, there has been a pointy decline in buyout activity, which recorded a decline of 28% in terms of usage and 30% in terms of volume.
Although there have been merely 66 (excluding Reliance) deals of over $100 million as against 108 in 2019, as long as investor sentiment remained subdued for nearly a 3rd of the year, sectors like technology, pharmaceuticals, Medtech and enterprise SaaS fared well. Going forward into the new decade, analysts expect “these new favourites to continue attracting above before PE/VC investments”.
In terms of percentage, start-up investments witnessed the steepest decline of 40% year-on-year to $4.8 billion across 557 deals in 2020. Investments within the sector stood at $7.9 billion in 2019. Overall deal activity, though, picked up significantly within the half-moon of the year. Investments during the amount stood at $18.5 billion compared to $10.9 billion in Q42019.
