Private equity investments in India hit a record $62.2 billion last year despite Covid-19 with 40% of the deal value coming from Mukesh Ambani led Reliance Industries Ltd deals, according to a report by Bain & Co and Indian Private Equity & Venture Capital Association (IVCA).
Sriwatsan Krishnan, partner and leader in Bain India’s private equity practice, said that the deal volume rose 5% year over year.
However, barring the Reliance transactions, the deal value fell 20% over 2019, as the volume of large deals of more than $100 million decreased by around 25%.
Last year, the Reliance deals involved investments by Facebook Inc. and Google in Jio Platforms Ltd, totalling $10.2 billion.
Reliance also signed a pact to acquire Kishore Biyani-led Future Group’s retail, wholesale, logistics and warehousing businesses for close to $3.4 billion, but the deal is facing resistance from Jeff Bezos-led Amazon.com Inc. Besides, Reliance acquired online pharmacy NetMeds and furniture retailer UrbanLadder to expand its retail empire.
The report also noted that overall investment activity remained muted between March and May last year because of the strict lockdown imposed to contain the spread of the coronavirus pandemic. But investor confidence bounced back in the second half to pre-Covid levels with late-stage and buyout deals witnessing increased traction.
In terms of sectors, consumer tech and IT/ITES were the largest in investment value in 2020.
Consumer-tech investments were driven by accelerated growth in digital channels and surge in user adoption of on-demand, at-home cross-tech services that led to jump in deals in edtech, fintech, verticalised e-commerce, and foodtech, with big-ticket investments in Byju’s, Zomato, and FirstCry, it noted.
Bain’s Krishnan said that healthcare got a boost last year on the back of big-ticket deals in pharmaceuticals manufacturing and distribution and active pharmaceutical ingredient (API) development.
However, the deal value of banking, financial services and insurance (BFSI) sector saw a 60% decline due to uncertainty over non-performing assets (NPAs), the Reserve Bank of India (RBI)-imposed bank moratorium, and the impact of Covid-19 on lending, added Krishnan.
The report also said that while the exit volume remained buoyant last year overall exit value declined by 30% over 2019. The top 10 exits accounted for 60% of exit value, up from 50% in 2019, with BFSI, real estate, and IT/ITES being the largest contributors, it said. The exit momentum is expected to continue in the next one to two years as the portfolio of private equity firms mature, it added.