Private equity and venture capital investments more than halved to USD 3.6 billion in May 2021 when compared to the preceding April’s USD 7.5 billion and a third lower than the year-ago period’s USD 5.4 billion, a report said on Monday.
However, on a year to date basis, the venture investments by these two categories of investors have doubled to USD 20 billion for the first five months of 2021, the report by industry lobby IVCA and consultancy firm EY said, stressing that investors continue to remain bullish.
It can be noted that the country underwent the ravages of the second wave of the pandemic since April this year. There were localised lockdowns across the country in May 2021, while there were USD 4.6 billion in investments in Jio Platforms in May 2020 despite the national lockdown. ”Investors will be closely watching the Government’s preparedness to avert/deal with a possible third wave, better vaccine rollout and the impact of the pandemic on the country’s macro and fiscal health in the coming months,” EY partner Vivek Soni said.
He flagged the rise in global inflation, its impact on commodity prices and the US Fed’s reaction to rein in inflation as the key risks for India.
The report said the surge in deal activity in 2021 is led by COVID resilient sectors like e-commerce (which has received USD 4.3 billion in investments), technology (USD 3.8 billion), pharma (USD 1.4 billion), media and entertainment (USD 1.2 billion), education (USD 885 million) and healthcare (USD 801 million). ”We expect this ‘polarisation’ of investments to continue till the outlook on pandemic related lockdowns and disruptions changes materially,” Soni said.
From a deal numbers perspective, the 60 transactions in May 2021 were almost at par with the year-ago period, but lower than the 70 recorded in April.
The real estate and infrastructure investments at over USD 1 billion helped the overall deal number in May, as pure-play PE and VC deal investments were down 54 per cent at USD 2.5 billion.
From an exits perspective, May 2021 recorded divestments of USD 12 billion to emerge as the second-best month till date, it said, adding that capital markets driven exits will increase meaningfully as a number of Indian ‘unicorns’ like Zomato and Paytm follow up on their IPO plans.
Total fundraises in May came at USD 154 million compared to USD 50 million of May 2020, and included Motilal Oswal raising USD 89 million in the first close of its fifth real estate fund.
