PE investments hit 10-year high in 2019

Private equity investments stood at $17.3 billion in 2019; fund raising, too, was the highest in 10 years at $7.99 billion.

At $17.3 billion, private equity investments in India hit a 10-year high in 2019, according to data from Refinitiv, a global provider of financial markets data and infrastructure.

It showed good year-on-year growth, too, at 60.5% from $10.8 billion in 2018—the second highest annual growth seen in a decade. In 2017, PE investments grew to $13.7 billion—180.7% more than $4.9 billion invested in 2016.

In terms of the number of deals, 2019 saw the highest deal count of 616, a growth of over 37% compared to 449 deals in 2018. The average deal size in 2019 was $28.1 billion, the second-highest to $45.2 million in 2017 when 303 private equity deals were clinched.

Refinitiv’s data on PE fund raising highlights that 2019 was the best year of the decade when $7.99 billion were raised. Compared to $5.45 billion raised during 2018, the annual growth in 2019 was over 46.5%—the second best to that in 2018 where over 223.3% growth was recorded over 2017’s $1.7 billion. In 2019, 37 funds raised the record amount which averaged the raising per fund to around $215.9 million—a cool 50.5% higher than the 2018 average of $143.5 million.

The following five sectors absorbed 84% of total investments in 2019: Internet-specific, computer-specific, utilities, financial services, transportation. Last year the share taken in by these was 72.2%.

Investments in the Internet-specific sector added up to $6.7 billion in 2019, which accounted for nearly 38.5% of total investments in the year. In comparison, in 2018, the Internet-specific sector saw investments of nearly $5.8 billion which worked out to 53.4% of the year’s total investments.

Among the top five sectors, 2019 saw over $2.2 billion worth of investments in utilities sector, while 2018 had no investments in that area. Among the top 10 private equity investments during 2019, Refinitiv counts Brookfield’s $1.87 billion invested in Pipeline Infrastructure Pvt. Ltd—which owned Reliance Industries’ 1,400-km natural gas pipeline from Kakinada in Andhra Pradesh to Bharuch in Gujarat—as the highest valued deal. The eighth highest deal of 2019 was the $363 million invested in India Grid Trust—the Sterlite Power Grid Ventures-promoted infrastructure investment trust (InvIT) comprising power transmission projects—by buyout fund KKR and Singapore’s sovereign fund GIC.

When it came to private equity exits, the year 2019 was a lacklustre one. At $884.6 million, just four exit deals via initial public offering (IPO) were recorded during 2019, as compared to five IPO exits worth $770.1 million in 2018. Over the decade, since 2010, 2017 remains the record year when seven IPO exit deals helped PE investors mop up over $2.7 billion, which followed 2016 when $2.1 billion were mopped up through 13 IPO exits.

During 2019, at $338.5 million, the value of trade sales dipped over 87%, from over $2.7 billion in 2018 despite the deal count rising from 25 in 2018 to 27 in 2019. However, secondary sales saw over a 196% jump in total deal value in 2019 to $574.98 million over nine deals from $194.2 million in 2018 over 10 deals. For secondary sales, 2016 was the year when nearly $1.3 billion were transacted over eight deals.

Source: Fortune India

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