The year 2019 was full of challenges domestically as well as internationally. The year saw a series of concerns including an overall slowdown, liquidity crunch, global headwinds, auto/real estate stress, non-banking financial company (NBFC) crackdown and high valuation tremors.
PricewaterhouseCoopers (PwC) in its research report noted that despite the challenges faced by India this year, fiscal policies aimed at reviving the capital cycle and economy would be an additional trigger in 2020.
In fact, the PwC report highlighted that 2019 was the second-best year for deal activity in India, surpassing years prior to 2018. Private equity (PE) investments recorded deals worth $36 billion as of November 30, 2019, an 11 percent decline in terms of value compared to last year, which saw investments worth $40 billion. This slowdown could be attributed to fewer billion-dollar bets and a global slowdown, which was the driving force behind the cautious approach of investors.
The multi-national professional services firm also highlighted that foreign investors are bullish in India and that the consolidation phase will only fade when companies adapt to new-age technologies and scale up their operations.
Surprisingly, this year, buyouts saw an uptick after investors looked for investment opportunities to extract maximum value. Additionally, consolidation, secondaries and deleveraging have contributed towards this uptick in buyouts, a trend likely to drive PE activity in 2020, added the report.
In case of PE investments this year, the firm believes that technology witnessed $10 million, accounting 28 percent of the investment value this year.
Moving on to the future outlook, PwC said, "Macroeconomic indicators have led to a lack of buoyancy in the capital markets, which in turn has posed challenges to future growth and set up a steep climb in 2020."
Furthermore, the report stated that the investor perspective on India is more long-term and the current market slowdown may not result in a sense of urgency or concern for most. However, a more conducive deal environment backed by effective reforms and better governance would further boost sentiment and attract investments.
First Published: Dec 24, 2019 2:06 PM IST
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