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How 2020 paved the way for private equity sector: Report


NEW DELHI: While the year 2020 was going through a challenging situation in terms of an economic slowdown, further accelerated by the pandemic, private equity investments in India witnessed an all-time high deal value, according to a report.

Private Equity investments reached a five-year-high at $38.34 billion. The investments were influenced by Reliance’s Jio and Retail Ventures deals as they emerged as contributors, making up for 43% of the total private equity deal value. In terms of volume, PE investments registered a drop of 9.41% on a Y-o-Y basis. The Information Technology sector continued to rule the roost and registered a 7% growth on a year-on-year basis and accounted for 57% of the total PE deal activity. The VCCEdge Annual Deal Report came up with these findings recently.

“The funds launched and targeted capital in CY 2020 dropped drastically by 38% and 83% respectively. This was due to the outbreak of coronavirus as new commitments were on hold, fund launches were delayed, and limited partners were suddenly faced with a liquidity crunch as their long standing investments lost value swiftly. However, this did not affect the PE investments in India as it set the record by touching an all-time high deal value. PE deal value is expected to reach $84 bn by 2025,” said Shalil Gupta, Chief Business Officer, Mosaic Digital – An HT Media Group Company, in a statement.

Mergers and Acquisitions deals improved in terms of deal value, a healthy 19%. However, there was a decline of 27% in terms of volume on a Y-o-Y basis. Deal activities, however, continued unperturbed, with domestic players accounting for 61% of the total M&A deal activity. Inbound, outbound and other miscellaneous deals contributed to the rest.

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ECM deal value touched a high of $26.84 billion, with a recorded increase of 144% on a year-on-year basis. Public markets majorly driven by IPO previously, gave us an impression of losing charm. Its place was claimed by Qualified Institutional Placement followed by Rights Issue and then IPOs for another year after 2018.

Exits on the other hand slowed down for the fifth year in a row. The year recorded a drop of almost 22% in terms of exit activities and 39% in terms of value. 2020 saw only 136 exits where investors unlocked $4.07 billion of value. The quantum of funds launched this year also came down by 37.50% and the targeted capital also witnessed a slump of 83% on a year-on-year basis. The targeted capital of the newly launched funds of 2020 was $2.33 billion as against the $13.36 billion in 2019.





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