‘PE/VC investments in 2020 to be sub 20%’

Propelled by infrastructure bets, deal activity by private venture investors grew by 28% to USD 48 billion in 2019 but will slow down to under 20% in 2020, a report said.

Infrastructure investments by private equity and venture capital funds accounted for USD 14.5 billion during the year, which is higher than the play in seven years combined, the data by consultancy firm EY showed.

The surge in deal making to record highs comes at a time when economic growth is plummeting to new lows every quarter, leaving policymakers concerned.

In what can be construed as a worrisome picture, growth capital investments grew by a modest 9% to USD 14.5 billion, which was helped by the infra sector, it said, adding pure play PE/VCs' growth capital investments declined 26% in terms of value and 13% by volumes.

"While our outlook for 2020 is positive, we expect investment growth to slow down to about 15-20% in 2020," its partner Vivek Soni said in a statement. He added that there is $50 billion of dry powder waiting to be invested.

The total investments are 1.7% of the Indian GDP, which is the same level as the one observed in China in 2018, the statement said.

From a deal making perspective, the USD 16.2 billion in buyouts for a majority stake witnessed in 2019 made the segment emerge as the leader, it said.

Start-up investments at $7.9 billion were the highest ever, it said, adding that such transactions constituted for a majority 610 of the 1,037 deals in 2019.

From an exit perspective, there were 156 deals in which investors took cheques of USD 11.5 billion.