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Private equity and venture capital investments recorded a 24-month low of USD 1.7 billion in February this year, primarily on account of significant decline in large deals, says an EY report.
According to the IVCA-EY monthly PE/VC roundup, uncertainty over the impact of COVID-19 is expected to act as a significant headwind to Indian PE/VC investments.
Further, travel restrictions and inability of people to meet face-to-face is expected to delay work-in-progress deals and limit the number of new deals from being struck, the report said.
There were five large deals worth USD 700 million in February 2020 compared to nine deals worth USD 2.0 billion last year and five deals worth USD 1.4 billion in January 2020.
"This is the lowest aggregate value of large deals in over 19 months. The largest deal announced in February saw General Atlantic invest USD 200 million in BYJU’S, an edtech company, followed by Warburg Pincus’ investment of USD 150 million in Apollo Tyres Limited," the report said.
Soni further said that besides the coronavirus scare, domestic issues concerning taxation policies impacting InvIT’s and REITS and lingering issues over the financial health of some of our domestic banks and NBFCs, will act as sentiment dampeners, potentially slowing down large ticket PE/VC investments in the short term.
From a sector point of view, education sector (USD 311 million across five deals) has emerged as the top sector for the first time due to the large investment in BYJU’S, followed by technology (USD 271 million across 18 deals) and real estate (USD 232 million across three deals).
Financial services, that has traditionally been one of the top sectors, was relegated to the fifth place with USD 162 million invested across nine deals, the report said.
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