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Private equity investments in Indian companies grew 38 per cent to $62.2 billion last year, with inflows into Reliance Industries' telecom and retail ventures contributing nearly 40 per cent of the total value of the deals, a report said on Wednesday.
Barring investments into Jio Platforms and Reliance Retail, the total deal value was down by 20 per cent over 2019 as the volume of large deals of more than $100 million dipped by a fourth, as per the report by Bain & Company and India Venture Capital Association.
Overall investment activity remained muted from March to May last year due to COVID-led uncertainties and investor confidence recovered strongly in the second half to pre-COVID levels with late-stage and buyout deals witnessing increased traction, it said.
According to the report, the pandemic also led to a shift in the type of deals made, with investors focusing on alternate investment strategies such as distressed opportunistic sales and qualified institutional placements.
In absolute terms, consumer tech and IT/ITES (IT-enabled services) were the largest sectors in terms of investment value in 2020.
The report said that consumer tech investments were driven by accelerated growth in digital channels and spike in user adoption of on-demand and at-home cross-tech services.
The healthcare sector received additional attention from investors in the pandemic year, with deals growing 60 per cent as companies sought to de-risk their supply chains, it added.
However, high non-performing assets and the impact of the loan repayment moratorium on bank balance sheets led to a 60 per cent decline in investments in the Banking, Financial Services and Insurance (BFSI) sector, as per the report.
From an exits perspective, there was a 30 per cent decline in the value of deals struck by private equity funds but the activity was higher in the last quarter of the year.
In 2020, the number of closed funds halved to 43 from 86 in 2019 due to the pandemic-induced flight of capital to safety.
However, investors are optimistic about fund raising environment in 2021, primarily due to a rising limited partners' confidence in the Indian market, the report said.
High traction is expected in IT/ITES, consumer tech, and healthcare sectors going forward, the report, adding that the BFSI sector is also set for recovery.