Deals values up 42 pc in May, PE/VCs shift focus to realty and infra from tech

Private equity and venture capital funds invested USD 5.3 billion in Indian entities in May 2022, 42 per cent more than the year-ago period, a report said on Wednesday. However, compared with USD 7.5 billion of infusion in April, the investments were down by 29 per cent, the report by industry lobby IVCA and consultancy firm EY said. From a deal volume perspective, there were 109 transactions in May as against 66 in the year-ago period and 117 in April 2022.

The heightened investment activity in May 2022 was on the back of an increased focus on the real estate and infrastructure sector by investors seen in bets of over USD 1.7 billion, after focusing on the e-commerce and technology sector in the whole of 2021, the consultancy firm's partner Vivek Soni said. Soni said while the macro sentiment remains positive, there are uncertainties which can impact the deals going forward, and listed out monetary policy tightening as the key factor which can affect capital flows in India.

Other downside risks include rising inflation, oil prices spike, depreciation in rupee and a potential resurgence in COVID-19 cases in the country, he said. May 2022 recorded 14 large deals of over USD 100 million each aggregating to USD 3.9 billion, which included the Adanis-controlled Mumbai airport raising USD 750 million debt from Apollo Global.

By deal type, growth deals received maximum attention in May 2022 at USD 2 billion across 19 deals, while startup investments were the second highest with USD 1.6 billion invested across 73 deals. The month saw 22 exits worth USD 400 million compared to USD 12 billion recorded across 17 exits in May 2021, and USD 2.8 billion across 27 exits in April 2022, the report said.

PE and VC funds have raised USD 668 million to be deployed in Indian enterprises for investments in the future, it said.