India is Likely to Hold its Position as a Preferred Destination for Global PE Players

Despite the major economic disruptions that India faced in 2020 due to the COVID-19 pandemic, the country is expected to remain as a popular market among the PE investors. In 2020, a number of issues such as inadequacy of capital, labour disruptions, contraction of demand, etc. had emerged. However, economic disruptions are known to be a good time for developing better portfolios by the private equity companies.

When the lockdown was initially enforced, the PE companies were cautious in their approach. They primarily focused on strengthening their existing portfolios. However, these companies soon started looking for better assets as the impact of the pandemic on various sectors became more prominent. The total PE investments recorded by the end of the year were worth USD 38.2 billion, which is quite close to the USD 38.9 billion investment recorded in 2019. Evidently, the PE investment sector had managed to maintain the momentum and pace of the previous year.

Marquee investors were particularly seen investing in Retail Venture and Jio Platforms of the Reliance Group. However, other than that the PE players displayed high activity in terms of investment. Attracting investments worth USD 2.5 billion, the healthcare sector showed prominence in the market. This, however, was expected to happen due to the sudden increase in the importance of healthcare during the pandemic. The technology sector was barely even affected by the pandemic and recorded USD 5.8 billion PE investment.

There were major concerns regarding the real estate sector due to the crisis it was facing. However, it still attracted investments worth USD 4.8 billion with RMZ Corporation being the main investor. The education sector recorded USD 1.3 billion of PE investments as well. From these trends, it is evident that the global PE players feel optimistic about the potential of India in the long run. Despite the short-term problems created by the pandemic and the low GDP, they continue to invest in India aiming for the long-term benefits.

Due to the pandemic, businesses were forced to implement the latest technologies and strong backends. The PE industry helped and guided their portfolio companies in this aspect, allowing them to survive the crisis. Considering the fact that India would become one of the fastest-growing economies in the coming decade, PE investments in India are expected to grow.