The total value of private equity investments in India hit a record $62.2 billion in 2020 led by the Jio Platforms and Reliance Retail deals.
At $26.5 billion, the investments jointly bagged by the two Reliance entities comprised about 40% of the total deal value, according to India Private Equity Report 2021 launched by Bain & Company and Indian Private Equity & Venture Capital Association (IVCA).
Excluding Jio Platforms and Reliance Retail, the total deal value was, however, down by 20% as the volume of large deals, totalling over $100 million dipped by around 25%.
Total growth stage VC (venture capital) investments in India managed to touch $10 billion in 2020 defying a pandemic year; recording only a marginal decline from $11.1 billion in investments garnered by companies in 2019. Most of the investments were led by the edtech, foodtech and enterprise SaaS.
“Overall, the pandemic period saw a shift in the type of deals done, with investors focusing on alternative equity investment strategies,” analysts said in the report.
From a sector standpoint, healthcare, consumer tech, and manufacturing contributed the most to growth, while IT/IT-enabled services (ITES) remained relatively strong despite contractions across several sectors.
In absolute terms, consumer tech and IT/ITES were the largest sectors in investment value in 2020. Consumer tech investments were driven by accelerated growth in digital channels and spiked user adoption of on-demand, at-home cross-tech services. This led to a deal surge in edtech, fintech, verticalised e-commerce, and foodtech, with big-ticket investments in Byju’s, Zomato, and FirstCry.
The BFSI investment value, however, experienced a 60% decrease due to uncertainty over NPAs, the RBI-imposed bank moratorium, and the impact of Covid-19 on lending. Buyouts too declined due to reduced cheque sizes and slowdown in the real estate BFSI sectors.
“There has been a steady rise in the number of active PE funds in 2020 with global and domestic general partners (GPs) making up the bulk of share at 60%, followed by limited partners(LPs) and corporates. An indication of growing investor confidence in the Indian market is visible through the increasing penetration of major GPs and LPs into India’s deal value. PIF and KKR were the biggest investors in 2020 with around $3 billion each, while Blackstone and GIC were lead contributors at around $1.5 billion each, after excluding Jio Platforms and Reliance Retail deals,” analysts said.
According to Bain & Company’s India Private Equity survey 2020, investors expect increasing interest in digitally accelerated opportunities such as digital-health fintech and edtech segments.