Private equity (PE) investments almost doubled in May when 58 deals worth $5.4 billion were made compared to $2.8 billion in the same month last year but just one company took the biggest share of the business pie.
Around $4.6 billion, or 85 per cent of the total deals, invested was in Jio Platforms, the digital arm of Reliance Industries. If not for Jio Platforms, PE/VC investments would have recorded a fourth straight month of decline.
According to data from EY-IVCA, investments last month were 92 per cent higher compared to May 2019 ($2.8 billion) and 5.8 times the value recorded in April 2020 ($935 million).
PE/VC investments would have recorded a fourth straight month of decline, recording just $791 million in investments if the deals for Jio Platforms are set aside. It would have also been a 72 per cent YoY decline and 15 per cent lower than April 2020. In terms of volume, deals in May 2020 declined 28 per cent YoY and 23 per cent sequentially (58 deals in May 2020 vs. 80 deals in May 2019 vs. 75 deals in April 2020).
May 2020 recorded five deals worth $4.9 billion, compared to three large deals worth $820 million last year.
Four of the five large deals in May 2020 involved investments in Jio Platforms. The largest PE deal announced in May saw KKR invest $1.5 billion in Jio Platforms.
In May 2020, growth investments were the highest in value with $4.9 billion recorded across 12 deals, a 5.7-fold increase YoY ($846 million in May 2019) followed by buyouts worth $283 million across three deals, 2.8 times YoY increase ($100 million in May 2019) and start-up investments worth $172 million, 71 per cent YoY decline ($594 million in May 2019). Private investment in public equity (PIPE) deals worth $110 million across three deals were recorded in May 2020 compared to $62 million across two deals in May 2019.
From a sector point of view, telecom sector ($4.6 billion across four deals) emerged as the top sector due to Jio Platforms, followed by life sciences sector ($354 million across four deals) which includes Carlyle’s buyout of 74 per cent stake in SeQuent Scientific Limited for $210 million and financial services ($309 million across 16 deals).
Vivek Soni, partner and national leader for Private Equity Services at EY India, said that the fundraising spree by Jio Platforms has pushed Indian PE/VC investment in May 2020 above $5 billion. “Adjusting for these marquee deals, Indian PE/VC investment activity is on a downward trajectory. Nonetheless, these deals help highlight investor confidence in the India story,” said Soni.
As anticipated, the defensive sectors are witnessing renewed interest from investors. In May 2020, life sciences sector received the second highest amount of PE/VC investments of 354 million (after telecom). On the exits front, financial services sector recorded the highest value of exits as investors looked to book some profits in listed securities after the recent recovery in the equity indices.