Private equity investments hit record high of $28.66 billion in 2020

Private equity investments in India hit a record high of $28.66 billion till September end this calendar year, significantly over the $16.27 billion invested in entire 2019. In 2018, PE investments stood at $10.8 billion.

Although PE investments in volume terms have seen a huge surge so far in 2020, there has been a drop in the number of deals, which came in at 560 so far this year as against 663 in entire 2019, data available with Refinitiv, a global provider of financial markets data, showed. In the last four years including 2020, the total PE investments have touched nearly $70 billion.

The strong showing in PE investments so far in calendar 2020 was driven by flows into Jio Platforms at $15.34 billion, according to Refinitiv. The next highest was for Tower Infrastructure Trust at $3.4 billion followed by Flipkart Online Services at $1.2 billion.

There was huge bump up in PE investments in the July-September 2020 quarter at $23.47 billion compared with $ 1.49 billion in the second quarter ended June 30 this calendar year. On the number of deals, too, the third quarter ended September 30 saw a rise at 197 from 184 deals in the previous quarter.

Going by the trend so far, it is clear that PE firms don’t want to miss an opportunity to put more money to work during the Covid-19 pandemic, say industry observers. It may be recalled that PE firms had missed a similar opportunity during the global financial crisis of 2007-08.

Deal activity

In the Indian landscape, there has been no slowdown in the deal activity in each of the three quarters so far in 2020. The number of deals in the first, second and third quarters this calendar year stood at 179, 184 and 197, respectively.

Although few PE firms anticipated that entire industries could be shuttered overnight, those with kegs of dry powder and loads of fire power made the most of the situation to buy into Indian firms at relatively cheap valuations in the Covid-19 scenario, industry observers said.

In terms of industry-specific investments, communications, internet-specific and computer software have seen the maximum investments coming in the third quarter of 2020. Internet-specific companies continue to attract maximum PE interest in the third quarter 2020 — at $2.87 compared with $418 million in the previous quarter. Computer software saw an investment of $1.2 billion and communications stood at $18.74 billion in the third quarter of 2020.

Meanwhile, fund-raising (by PE firms) in the September quarter this year stood at $1.85 billion, higher than the $149 million raised during the previous quarter. In the third quarter last calendar year, the total fund raising stood at $ 3.38 billion.