PE/VC outlay in May falls to $3.6 bn

MUMBAI: Private equity and venture capital investments more than halved to $3.6 billion in May 2021 when compared to the preceding April’s $7.5 billion and a third lower than the year-ago period’s $5.4 billion, a report said on Monday.

However, on a year to date basis, the venture investments by these two categories of investors have doubled to $20 billion for the first five months of 2021, the report by industry lobby IVCA and consultancy firm EY said, stressing that investors continue to remain bullish.

It can be noted that the country underwent the ravages of the second wave of the pandemic since April this year. There were localised lockdowns across the country in May 2021, while there were $4.6 billion in investments in Jio Platforms in May 2020 despite the national lockdown.

“Investors will be closely watching the Government’s preparedness to avert/deal with a possible third wave, better vaccine rollout and the impact of the pandemic on the country’s macro and fiscal health in the coming months,” EY partner Vivek Soni said.

He flagged the rise in global inflation, its impact on commodity prices and the US Fed’s reaction to rein in inflation as the key risks for India.

The report said the surge in deal activity in 2021 is led by “Covid resilient sectors” like e-commerce (which has received $4.3 billion in investments), technology ($3.8 billion), pharma ($1.4 billion), media and entertainment ($1.2 billion) and healthcare ($801 million).

“We expect this ‘polarisation’ of investments to continue till the outlook on pandemic related lockdowns and disruptions changes materially,” Soni said.