Reliance Industries Stake Sales Lead to 38% Increase in PE Investments in 2020: Report

Reliance Industries Stake Sales Lead to 38% Increase in PE Investments in 2020: Report

MUMBAI: Private equity investments in Indian companies grew 38 percent to $ 62.2 billion last year, with inflows in Dependency industriesTelecommunications companies and retailers contributing nearly 40 percent of the total value of the deals, a report said Wednesday.
Except investments in Jio Platforms Y Reliance Retail, the total value of the operation was reduced by 20 percent from 2019, as the volume of large operations of more than $ 100 million fell by a quarter, according to the report by Bain & Company and the Association of Venture Capital of India.
Overall investment activity was quiet from March to May last year due to Covid-led uncertainties and investor sentiment recovered strongly in the second half to pre-Covid levels with purchase agreements and last stage that witness greater traction, he said.
According to the report, the pandemic also caused a change in the type of deals made, with investors focusing on alternative investment strategies, such as distressed opportunistic sales and qualified institutional placements.
In absolute terms, consumer technology and IT / ITES (IT-enabled services) were the largest sectors in terms of investment value in 2020.
The report said consumer technology investments were driven by accelerated growth in digital channels and an increase in user adoption of cross-technology services on demand and at home.
The healthcare sector received additional attention from investors in the year of the pandemic, with deals growing 60 percent as companies sought to reduce risk in their supply chains, he added.
However, high delinquencies and the impact of the loan repayment moratorium on bank balance sheets led to a 60 percent decline in investments in the Banking, Financial Services and Insurance (BFSI) sector, according to the report.
From an outflow perspective, there was a 30 percent decline in the value of transactions made by private equity funds, but activity was higher in the last quarter of the year.
In 2020, the number of closed funds halved from 86 in 2019 to 43 due to pandemic-induced capital flight to security. However, investors are optimistic about the fundraising environment in 2021, mainly due to the growing confidence of limited partners in the Indian market, according to the report.
High traction is expected in the IT / ITES, consumer technology and healthcare sectors in the future, the report, adding that the BFSI sector is also ready for recovery.


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