Private equity (PE) and venture capital (VC) investments more than halved to USD3.6 billion in May 2021 when compared to the preceding April’s USD 7.5 billion and a third lower than the year-ago period’s USD 5.4 billion, says a report by industry lobby IVCA (Indian Private Equity and Venture Capital Association) and consultancy firm EY.
However, on a year to date basis, investments by these two categories of investors have doubled to USD 20 billion for the first five months of 2021, the report said, stressing that investors continue to remain bullish.
The report said the surge in deal activity in 2021 is led by “Covid-resilient sectors”, including e-commerce (USD 4.3 billion in investments), technology (USD 3.8 billion), pharma (USD 1.4 billion), media and entertainment (USD 1.2 billion), education (USD 885 million) and healthcare (USD 801 million).
“We expect this ‘polarisation’ of investments to continue till the outlook on pandemic related lockdowns and disruptions changes materially,” PTI quoted EY partner Vivek Soni as saying.
“Investors will be closely watching the Government’s preparedness to avert/deal with a possible third wave, better vaccine rollout and the impact of the pandemic on the country’s macro and fiscal health in the coming months,” Soni said.
He flagged the rise in global inflation, its impact on commodity prices and the US Fed‘s reaction to rein in inflation as the key risks for India.
The 60 transactions recorded in May 2021 were almost at par with the year-ago period, but lower than the 70 recorded in April, the report states.
The real estate and infrastructure investments at over USD 1 billion helped the overall deal number in May, as pure-play PE and VC deal investments were down 54 per cent at USD 2.5 billion, it adds.