Due to a significant fall in the number of large deals, the monthly investments in the private equity sector fell to $1.7 billion in February 2020 from $2.8 billion in February 2019, shows a report by the Indian Private Equity and Venture Capital Association and consulting firm EY.
Experts believe the Indian private equity investments faces a major headwind in the form of pandemic coronavirus.
Vivek Soni, Partner and National Leader, Private Equity Services, EY said, “Uncertainty over the impact of COVID-19 is expected to act as a significant headwind to Indian PE/VC investments. The rapid global spread of the pandemic over the past 30-45 days has spiked business risk premiums, which has already led to significant downward correction in capital markets around the world, bringing high volatility to the home markets and sovereign wealth funds / pension funds that have been making >US$100m investments in India. Further, travel restrictions and inability of people to meet face-to-face is expected to delay work-in-progress deals and limit the number of new deals from being struck.”
Meanwhile, there were five large deals worth US$700 million in February 2020 compared to nine deals worth US$2.0 billion last year. The report highlights this is the lowest aggregate value of large deals in over 19 months.
The largest deal announced in February was General Atlantic’s investment of US$200 million in BYJU’S, an edtech company, followed by Warburg Pincus investment of US$150 million in Apollo Tyres Limited.
Financial services, that has traditionally been one of the top sectors, was relegated to the fifth place with US$162 million invested across nine deals.