Private equity investments witnessed a robust yearly growth in October with 72 PE deals garnering around USD 3.7 billion, even as merger and acquisition activity saw a downtrend, a report said on Thursday.
According to Grant Thornton's monthly PE Dealtracker, private equity/venture capital transactions reported 22 per cent and 25 per cent increase in deal volumes and values, respectively as compared to October 2018.
The rise in PE deal values was largely driven by the corporate tax rate cut, which has improved both investor sentiment and confidence.
Last month, the average deal size stood at USD 52 million, up from USD 28 million recorded in September 2019.
"There were 72 deals aggregating to USD 3.7 billion reported in October 2019. Upbeat PE/VC activity during the month offsets the shortfall in merger and acquisition (M&A) activity," Pankaj Chopda, Director, Grant Thornton India LLP said.
"The key investments were primarily to pare debt, expand markets and capitalise on inorganic growth opportunities. Considering the current economic situation, we expect big ticket PE/VC investments to continue," Chopda said.
He further noted that debt-heavy and capital-starved sectors such as energy and natural resources, infrastructure management, and banking and financial services will be the major seekers for PE/VC investments.
"PE/VC transactions will continue to contribute a large share in the overall deal activity. However, the absence of large-ticket M&A transactions will weaken the overall deal activity," Chopda said.
Driven by Abu Dhabi Investment Authority (ADIA), PSP Investments of Canada and National Investment and Infrastructure Fund NIIF's USD 1.1 billion investment in GVK Group, the infrastructure sector dominated the PE investment arena, capturing 29 per cent of the PE deal value pie for the month.
Other major deals include Warburg Pincus and Premji Invest's investments in SBI General Insurance and Brookfield Asset Management's fund infusion in Hotel Leelaventure Ltd.
During January-October period, there were 666 PE deals worth USD 28.02 billion. In the year-ago period, there were 683 such transactions worth USD 17.99 billion.
"This demonstrated increased average deal size and resulted in the highest YTD values recorded, showing the appetite among PE players to invest in India," the report said.