Private equity inflows in Indian retail hit new high of $970 million in 2019

Despite tepid consumer spends, the total private equity inflows into Indian retail hit a new high in 2019 with an inflow of $970 million - a 19 percent share of the total $5 bn in overall Indian real estate, says research by ANAROCK Capital.

While commercial offices topped the funding charts, the retail sector witnessed the second-highest investments from various PE funds in 2019. Delhi-NCR received 63 percent funds of the total $970 million, followed by Hyderabad with a 20 percent share, it said.

“Back in 2018, retail inflows stood at a mere $355 mn, comprising just a 7 percent share of the total PE funds. In the previous five years, after 2019, the year 2017 saw the second-highest PE inflows in retail at $890 mn. Interestingly, in 2019, Delhi-NCR received the maximum PE inflows of about $610 mn – a massive 63 percent share of the total retail funds into Indian realty during this period,” said Shobhit Agarwal, MD & CEO – ANAROCK Capital.

“While commercial offices topped the funding charts, the retail sector witnessed the second-highest investments from various PE funds in 2019,” says Agarwal.

“Compared to 2018, total PE inflows into Indian retail saw an almost three-fold jump in investments – from $355 mn in 2018 to over $970 mn in 2019. Investors are betting big on selected Grade A mall projects which have a high scope of business profitability. Despite the consumption slump, many malls are doing excellent business today - and investors are keenly vying for such projects,” he said.

Apart from the top cities, Tier 2 and 3 cities are also on the radar of many PE funds which see these cities actively driving retail going forward. At least 36 percent (nearly $1 bn) retail-focused funds went to cities like Ahmedabad, Amritsar, Bhubaneshwar, Chandigarh, Nagpur and Mohali.

Overall PE inflows in Indian retail touched $2.8 bn in the five years between 2015 and 2019 - fairly close to the residential segments’ total PE inflows of $3.4 bn in this period.

Delhi-NCR received the maximum retail-focused PE inflows between 2015-2019 – more than $750 mn. MMR was second with $410 mn funnelled into retail over the last five years. Pune saw PE inflows of nearly $150 mn in the retail segment. Bengaluru retail saw total PE investments of $275 mn since 2015. Hyderabad and Chennai together attracted close to $230 mn during the same period, the report said.

Chandigarh was a major funding target for US-based Blackstone which invested $340 mn in a single large deal in 2017. Ahmedabad also drew the attention of PE investors and saw its retail sector draw nearly $220 mn in the last five years, the report said.