Report

India Private Equity Report 2020

Private equity and venture capital investments rose to their highest level in the last decade, $45.1 billion.

By Arpan Sheth, Sriwatsan Krishnan, Aditya Shukla, and Prabhav Kashyap Addepalli

Published on May 13, 2020
min read


Private equity in India had a record year in 2019. Private equity (PE) and venture capital (VC) investments rose to their highest level in the last decade, $45.1 billion, primarily due to the increasing number of large deals greater than $100 million as well as an increase in their average deal size. Record VC investments also contributed to the surge. In absolute terms, banking, financial services and insurance (BFSI) and consumer technology continued to be the top two sectors, while investments in real estate and infrastructure, telecom, and IT and ITES also grew. Following the trend from previous years, the total share of buyouts increased, with a rise in growth and late-stage investments. Written in collaboration with IVCA IVCA is the oldest and most influential PE/VC Industry body in India, with the sole focus to promote the AIF asset class within India and overseas. IVCA's mission is to promote a healthy environment for the growth of private equity and venture capital, which is needed to support economic growth, good governance, entrepreneurship, innovation and job creation in India. IVCA stands for the values of good governance, environment protection and poverty reduction through growth of the private sector. It helps establish high standards of governance, ethics, business conduct and professional competence. We reach out to the far-flung areas of India and also stand ready to assist on a global scale to contribute significantly. IVCA is a nonprofit organization powered by its members. The members are influential firms from around the world, including private equity and venture capital funds, corporate advisors, lawyers and institutional advisors. Asia-Pacific-focused fund-raising continued to decline due to the Chinese government’s tightened restrictions on PE investments. That said, India-focused dry powder remained healthy with no lack of capital for good deals. India also witnessed a decline in exit value in 2019, relative to the previous two years, resulting from a decreasing number of exits throughout the year. Investors said the primary reasons for weak exit opportunities were unpredictability and macroeconomic softness. Despite the decline, returns (multiple on invested capital) remained strong. We believe there will be a short-term dip in investment activity as a result of the Covid-19 pandemic, as already evidenced globally. However, price correction across the board will present an investment opportunity. Investors should pay close attention to their portfolios and be ready to adapt to changes in the economy. A strong exit track record will be important for future investments. Having seen record investments this year, Software as a Service and cross-sector technologies will be the most attractive opportunities for investors. A majority of investors believe that top-line growth along with capital and cost efficiency will be the largest value creators in the future. The key concerns among most investors are high-seller pricing expectations, macroeconomic softness and the Covid-19 pandemic. DOWNLOAD THE FULL REPORT (PDF)

Private equity in India had a record year in 2019. Private equity (PE) and venture capital (VC) investments rose to their highest level in the last decade, $45.1 billion, primarily due to the increasing number of large deals greater than $100 million as well as an increase in their average deal size. Record VC investments also contributed to the surge. In absolute terms, banking, financial services and insurance (BFSI) and consumer technology continued to be the top two sectors, while investments in real estate and infrastructure, telecom, and IT and ITES also grew. Following the trend from previous years, the total share of buyouts increased, with a rise in growth and late-stage investments.

Written in collaboration with IVCA

IVCA is the oldest and most influential PE/VC Industry body in India, with the sole focus to promote the AIF asset class within India and overseas. IVCA's mission is to promote a healthy environment for the growth of private equity and venture capital, which is needed to support economic growth, good governance, entrepreneurship, innovation and job creation in India.

IVCA stands for the values of good governance, environment protection and poverty reduction through growth of the private sector. It helps establish high standards of governance, ethics, business conduct and professional competence. We reach out to the far-flung areas of India and also stand ready to assist on a global scale to contribute significantly.

IVCA is a nonprofit organization powered by its members. The members are influential firms from around the world, including private equity and venture capital funds, corporate advisors, lawyers and institutional advisors.

Asia-Pacific-focused fund-raising continued to decline due to the Chinese government’s tightened restrictions on PE investments. That said, India-focused dry powder remained healthy with no lack of capital for good deals. India also witnessed a decline in exit value in 2019, relative to the previous two years, resulting from a decreasing number of exits throughout the year. Investors said the primary reasons for weak exit opportunities were unpredictability and macroeconomic softness. Despite the decline, returns (multiple on invested capital) remained strong.

We believe there will be a short-term dip in investment activity as a result of the Covid-19 pandemic, as already evidenced globally. However, price correction across the board will present an investment opportunity. Investors should pay close attention to their portfolios and be ready to adapt to changes in the economy. A strong exit track record will be important for future investments. Having seen record investments this year, Software as a Service and cross-sector technologies will be the most attractive opportunities for investors. A majority of investors believe that top-line growth along with capital and cost efficiency will be the largest value creators in the future. The key concerns among most investors are high-seller pricing expectations, macroeconomic softness and the Covid-19 pandemic.

DOWNLOAD THE FULL REPORT (PDF)