PE-VC investments so far in 2020 have declined 21 per cent to $28.9 billion between January and September 2020, compared to the same period last year, according to the IVCA-EY monthly roundup. However, this number would have declined 53 per cent to $17.2 billion compared to the same period last year if PE investments in Reliance Group entities are excluded. In terms of volume, the number of deals during January-September period declined by 10 per cent. One of the major reasons for the decline in PE-VC investments in 2020 so far is muted performance by infrastructure and real estate sectors, which contributed the most in 2019, in wake of coronavirus lockdown.
One of the biggest reasons for the decline is the underperformance of the infrastructure and real estate sectors, the report added. These segments attracted the highest PE-VC investment in 2019, accounting for 44 per cent of all PE-VC investments during January-September 2019. In 2020, these sectors have received only $2.9 billion in investments till date, accounting for just 10 per cent of total PE-VC investments. As a result, there has been a sharp decline in buyout activity as well, which has recorded a decline of 79 per cent in terms of value and 54 per cent in terms of volume, the report said. Infrastructure and real estate sectors accounted for 73 per cent of all buyouts by value between January and September in 2019.
From a sector point of view, almost all sectors recorded a sharp decline in value invested. Telecom, retail, education and pharma were the only sectors to record an increase in the same. Moreover, these sectors also recorded their highest ever value of investments in 2020, the report said. Telecom was the top sector with $10 billion invested across 13 deals mainly attributable to investments in Jio Platforms, followed by financial services with $4.1 billion invested across 114 deals (32 per cent decline y-o-y), technology with $2.3 billion invested across 106 deals, pharmaceuticals with $1.9 billion invested across 27 deals, education with $1.9 billion invested across 52 deals and retail and consumer sector with $1.9 billion invested across 30 deals, on the back of large investments in Reliance Retail.