Press release

A record high for private equity in India in 2020, with $62 billion in investment value and healthcare witnessing 60% growth over 2019

A record high for private equity in India in 2020, with $62 billion in investment value and healthcare witnessing 60% growth over 2019

Bain & Company’s latest India Private Equity Report finds an unprecedented rise in exit multiples even though exit value declined by 30%

  • June 09, 2021
  • min read

Press release

A record high for private equity in India in 2020, with $62 billion in investment value and healthcare witnessing 60% growth over 2019

MUMBAI–June 9, 2021– Total value of private equity investments in 2020 was at a record high of $62.2 billion. Jio Platforms and Reliance Retail deals contributed $26.5 billion, which is around 40% of the total deal value. This is according to Bain & Company’s India Private Equity Report 2021, released today. The report is launched in partnership with the Indian Private Equity & Venture Capital Association (IVCA), and analyzes the impact of Covid-19 on India’s private equity landscape by highlighting themes which have continued to hold true as well as new themes for 2020.

Sriwatsan Krishnan, partner and leader in Bain India’s Private Equity practice, added: “Despite Covid-19, we have seen a few investment themes continue from prior years. Strong deal volume flow continued with a 5% year over year (YoY) increase. Growth equity momentum held steady with $10 billion in investments, more than in all previous years and nearly at par with 2019. From a sector standpoint, strong momentum continued in consumer tech and IT/ITES. At the same time, new themes emerged in 2020. There was a moderation in cheque sizes as average deal size declined by 25% over 2019. In terms of sector-wise activity, healthcare witnessed a surge with big-ticket deals in pharmaceuticals manufacturing and distribution and API development. However, BFSI investment value experienced a 60% decrease due to uncertainty over NPAs, the RBI-imposed bank moratorium, and the impact of Covid-19 on lending.”

Investments: A record high

A steady momentum in growth equity continued with $10 billion in investments driven by a massive upsurge in late-stage deals, more than in all previous years and nearly at par with 2019. In addition, a strong deal volume flow continued with a 5% year over year (YoY) increase amidst a slowdown in the total value of investments.

Barring Jio Platforms and Reliance Retail, deal value was down by 20% over 2019, as the volume of large deals (>$100 million) dipped by around 25%. Although overall investment activity remained muted from March to May due to Covid-led uncertainties, investor confidence recovered strongly in H2 to pre-Covid levels with late-stage and buyout deals witnessing increased traction. The pandemic also led to a shift in the type of deals made, with investors focusing on alternate investment strategies such as distressed opportunistic sales and qualified institutional placements (QIPs).The top 15 deals in 2020 constituted around 40% of deal value versus 35% in 2019.

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. However, 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.

Arpan Sheth, a senior partner and leader of the Private Equity and Alternative Investor practice in Bain & Company India, said “Last year was a record high for Private Equity in India with $62B in investment value. Even excluding Jio and Reliance Retail deals, deal value was at $36B. While there was some slowdown from March to May with teams focusing on portfolio company operations, we witnessed strong recovery through Q3 and Q4 with pivot to new investments and fund launches to capture assets at good valuations. The increased confidence also led to larger cheque sizes and buyout deals. From an exit perspective, volumes remained buoyant even as exit value declined by 30% YoY in 2020. Exit activity was muted in Q2 and Q3 but rebounded strongly in Q4, with strong public markets being a key contributor. Last year saw an unprecedented rise in multiples driven by high-return generating Consumer Tech and BFSI exits. We expect continued exit momentum over the next one to two years as portfolios of leading PE investors mature and multiple IPOs planned for the next 12-18 months are launched.”

Within IT and ITES, abounding interest in software as a service (SaaS) and increased corporate focus on digital IT readiness drove multiple $100 million-plus deals which include Zenoti and Postman in SaaS and Virtusa and Majesco, in IT services. Healthcare saw the highest growth of around 60% over 2019—due to de-risking of the supply chain, India’s strength in chemistry and a resilient domestic market. APIs, contract development and manufacturing organisations (CDMOs) and formulations contributed 80% of total healthcare investment, with Piramal Healthcare, JB Chemicals, and SeQuent Scientific being the largest deals. BFSI, however faced a significant slowdown, with investments down by around 60% due to high NPAs and the impact of the loan repayment moratorium on bank balance sheets.

Competitive landscape: Rising fund focus towards India

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. As more funds increase focus towards India, over 70% of investors concur that global PE firms and LPs/Sovereign Wealth Funds (SWFs) investing directly is the biggest competitive threat. 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.

Further, gender diversity has become a criteria for LP fund investment and gender-balanced teams also tend to have higher return outcomes. Overall, women representation in India at 16% is close to the Asia-Pacific (APAC) average of at 19%, but representation at senior levels is significantly lower at 5%.

Fundraising: No lack of capital for good deals

Fundraising shrunk by 33% from 2019–2020, across several major APAC markets, with China showing steep declines on the back of tightening federal government regulations. India’s share in APAC fundraising however, remains steady at 3%. A robust investor sentiment is driving a trend towards larger fund sizes. But in 2020, the number of closed funds halved from 86 to 43, compared with 2019, due to the pandemicinduced flight of capital to safety. Investor confidence has remained high, with India-focused dry powder holding steady at $8 billion, and more than 90% of closed funds at target or oversubscribed. Going forward firms are optimistic about next year’s fundraising environment primarily due to a rising LP confidence in the Indian market enabling larger cheque sizes and broader sectoral focus.

Exits: High multiples even as exit value dipped

Exit volume remained buoyant while overall exit value declined by 30% year-on-year in 2020. Further, exit activity was muted in Q2 and Q3 as owners held onto assets amid a slowdown, but rebounded strongly in Q4—with strong public markets being a key contributor. 2020 saw an unprecedented increase in exit returns driven by high multiples on invested capital and the large volume share of consumer tech, IT/ITES, and BFSI exits. 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. A continued exit momentum is expected over the next 1-2 years as portfolios of leading PE investors mature given most portfolios did not reach maturity in 2020 and multiple IPOs planned for the next 12-18 months are launched.

Renuka Ramnath, founder, managing director and CEO at Multiples Alternate Asset Management and Chairperson, IVCA, said, “With over 1000 deals and $62 billion invested in a pandemic year , the alternate asset industry is the biggest accelerator for the growth of our economy.”

Impact of Covid-19 and outlook for 2021

Funds assessed the health and resilience of portfolio companies, and helped them navigate through the Covid-led disruption. . Almost 90% of India-based PE funds concur that portfolios have largely been able to ride out the storm and are focused on efforts to stay ahead of the curve. Additionally, a growing number of funds are focusing on sustainability and environmental, social, and governance (ESG) issues.

Covid-19 played a pivotal role in accelerating multiple trends, including the increase of online touchpoints, emergence of direct-to-consumers (D2C) players, adoption of remote working and a focus on healthier living. In addition, there are key macro-movements at play that will continue to shape the industry looking forward. From an investment perspective, sectors IT & ITES, consumer technology, and healthcare are poised to capitalise and BFSI is set to recover. According to Bain & Company’s India Private Equity survey 2020, investors expect increasing interest in digitally accelerated opportunities such as digital-health (65%), fintech (57%), and edtech (52%).

To receive a copy of the report or arrange an interview with its authors;

Indian media contact: Aparna Malaviya at or +91 9820273038

International media contact: Nicholas Worley at or +852 2978 8830

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