From an investment perspective, sectors such as IT & ITES, consumer technology, and healthcare are poised to capitalize on the interest of private equity investors to invest in the country and BFSI is set to recover, said Bain & Company in its India Private Equity Report 2021 released in partnership with the Indian Private Equity & Venture Capital Association (IVCA).
As per this report 2020 saw a record high total investment value of $62.2 billion. Jio Platforms and Reliance Retail deals contributed $26.5 billion, which was around 40% of the total deal value.
“A steady momentum in growth equity was witnessed with $10 billion in investments driven by a massive up-surge in late-stage deals, more than in all previous years and nearly at par with 2019,” the report said.
In addition, the pandemic 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), it said.
The top 15 deals in 2020 constituted around 40% of deal value versus 35% in 2019. From a sector standpoint, in absolute terms consumer tech and IT & IT enabled services (ITeS) were the largest sectors in 2020 while healthcare saw the highest growth of around 60%, over 2019.
The report said 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, the report said.
Exit volume remained buoyant while overall exit value declined by 30% year-on-year in 2020. But there was 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, the report said.