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PRIVATE EQUITY IN THE COVID ERA

24 Nov, 2020 | Mr. Darius Pandole - Managing Director & CEO, Private Equity & Equity AIFs, JM Financial

Private equity (PE) and venture capital investments in India reached $25.5 bn in the first 9 months of CY2020, which is comparable to the all-time high record number of $35 bn achieved in CY2019 (last 10 year average is approx. $16 bn for this period). A lion’s share of this was contributed by a string of deals struck by Reliance’s Jio Platforms amounting to $9.5 bn (INR 718 billion), which helped drive PE investments higher despite an otherwise subdued 3 quarters.

The year 2020 has been challenging and India remains vulnerable to a host of global and domestic risks. However things are slowly getting back on track. As businesses emerge from the nadir of the COVID-19 induced slowdown, fund managers are getting back in the market looking for investment opportunities. We also expect an uptick in M&A activity driven by industry consolidation over the coming months.

Once the economy emerges out of this unprecedented crisis, equity investments in the listed and private arenas are likely to throw up tremendous opportunities. This will be driven by the emergence of new investment themes such as greater work from home requirements, increase in the shifting of manufacturing activities into India, higher requirements for regular health and medical testing, renewed focus on health and wellness, etc. All of these trends can potentially throw up massive business opportunities across sectors like technology, manufacturing, healthcare, pharma, consumer, etc., which in turn will lead to significant opportunities for PE investors.

It seems clear that PE firms with high dry powder levels will aspire to buy into well managed Indian firms that can potentially provide sticky revenues, higher margin, generate free cash, better return on capital, along with a rational valuation. It may be recalled that many PE firms missed a similar opportunity during the 2007-08 crisis. This is a defining period in the PE industry and the firms that make the smartest deals today will be the ones that raise the most money tomorrow.

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PRIVATE EQUITY IN THE COVID ERA

24 Nov,2020 | Mr. Darius Pandole - Managing Director & CEO, Private Equity & Equity AIFs, JM Financial

PRIVATE EQUITY IN THE COVID ERA

24 Nov, 2020 | Mr. Darius Pandole - Managing Director & CEO, Private Equity & Equity AIFs, JM Financial

Private equity (PE) and venture capital investments in India reached $25.5 bn in the first 9 months of CY2020, which is comparable to the all-time high record number of $35 bn achieved in CY2019 (last 10 year average is approx. $16 bn for this period). A lion’s share of this was contributed by a string of deals struck by Reliance’s Jio Platforms amounting to $9.5 bn (INR 718 billion), which helped drive PE investments higher despite an otherwise subdued 3 quarters.

The year 2020 has been challenging and India remains vulnerable to a host of global and domestic risks. However things are slowly getting back on track. As businesses emerge from the nadir of the COVID-19 induced slowdown, fund managers are getting back in the market looking for investment opportunities. We also expect an uptick in M&A activity driven by industry consolidation over the coming months.

Once the economy emerges out of this unprecedented crisis, equity investments in the listed and private arenas are likely to throw up tremendous opportunities. This will be driven by the emergence of new investment themes such as greater work from home requirements, increase in the shifting of manufacturing activities into India, higher requirements for regular health and medical testing, renewed focus on health and wellness, etc. All of these trends can potentially throw up massive business opportunities across sectors like technology, manufacturing, healthcare, pharma, consumer, etc., which in turn will lead to significant opportunities for PE investors.

It seems clear that PE firms with high dry powder levels will aspire to buy into well managed Indian firms that can potentially provide sticky revenues, higher margin, generate free cash, better return on capital, along with a rational valuation. It may be recalled that many PE firms missed a similar opportunity during the 2007-08 crisis. This is a defining period in the PE industry and the firms that make the smartest deals today will be the ones that raise the most money tomorrow.