Infra, realty drive private equity/venture capital inflows up 27 pc at USD 23.4 bn

Mumbai: Inflows from private equity/venture capital routes rose 27 per cent to USD 23.4 billion across 536 deals in the first half of 2019 year-on-year, says a report.

The outperformance is mainly due to USD 11.1 billion inflows into the infrastructure and real estate asset classes, according to the data collated by EY India, which attributed the increase to 54 large deals of over USD 100 million.

While PE/VC investments stood at USD 12.3 billion, marginally down from USD 12.8 billion in the corresponding period in 2018, this was offset by 23 per cent higher inflows into the infrastructure and real estate sectors.

In terms of the number of deals, the increase was higher at 43 per cent H1 of 2018. In the first half, there were 536 deals as against 376 deals in the same period in 2018.

Like in 2018, large deals with a value of over USD 100 million continued to drive inflows. The reporting period saw 54 large deals aggregating to USD 17.2 billion (compared to 45 large deals worth USD 14.5 billion in H1 of 2018), making it a record in terms of large deals in any half-yearly period.

As many as 23 of the 54 large deals were in infrastructure (13 deals) and real estate (10 deals) worth USD 9.9 billion and seven of the top 10 deals were in infrastructure (five) and real estate (two) sectors.

Largest infra deal was Brookfield's buyout of Reliance Industries' East-West pipeline worth USD 1.9 billion, followed by Abu Dhabi Investment Authority and National Investment and Infrastructure Fund's USD 929 million investments in GVK's airport subsidiary for a 49 per cent stake.

The largest deal in the real estate sector saw Brookfield buying out four hotel assets of Hotel Leela Ventures for USD 572 million (which is pending for Sebi approval now).

From a pure-play PE/VC perspective, the largest deals included Carlyle and Canadian Pension Plan Investment Board's USD 817 million investment in SBI Life followed by GIC's USD 726 million investment in Bharti Airtel.

The first half saw 31 buyouts aggregating to USD 6.9 billion, the highest value and number for any half-year period ever, which was 39 per cent higher in terms of value and 29 per cent higher in volume.

Exits declined 26 per cent in terms of value (USD 4.1 billion vs USD 5.5 billion in 2018) and 24 per cent in volume (77 deals versus 101 deals in 2018).

Largest exit saw Carlyle and Temasek selling their stakes in Medanta to Manipal Hospitals for USD 377 million followed by Bain Capital and GIC paring down their investment in Genpact for USD 324 million.

Vivek Soni, a partner and national leader for private equity services at EY attributed the higher inflows to the infrastructure and real estate sectors which have taken the lead in attracting PE funds from marquee global investors.

The reporting period saw USD7.3 billion inflows into the infra sector, which is over 1.6 times of the entire 2018 inflows and is more than the previous two years investments put together, he said.