The buyout deals in property and infrastructure sectors were 2.5 times of other asset classes, said a replacement report by audit and consulting company EY and therefore the Indian venture capital & Private Equity Association (IVCA.)
In 2019, buyouts in property and infra were $11.6 billion while in other assets it stood at $4.6 billion. “While consistent growth in buyouts has been a serious driver of the general growth of PE/VC investments for the past three years, there was a small difference like the deals in 2019. Unlike in 2017 and 2018, where the expansion in buyout activities was in traditional PE/VC asset class, 2019 saw growth in infrastructure and property asset classes,” it said.
In 2019, 59 percent of the total value of investments in Property was buyouts, it said. In 2019, investments in Real State went up by 33 percent at $6.1 billion. “A large portion of them were buyout deals which may be a significant divergence from the sooner trend, where an outsized number of investments in property sector were credit investments,” the report said.
According to the report, buyouts in the property have risen from 0.4 percent in 2015 to three .6 percent in land deals.
In 2016, 2017, and most of 2018, a sizable amount of investments in the property were driven by credit platforms funding residential and commercial developments, capitalizing on lack of traditional modes of funding for the important estate sector, which was a fallout of the rising bank NPAs and liquidity constraints in NBFC sector.
“However this trend started shifting towards buyouts in 2018 and 2019 with the likes of Blackstone and other large buyout funds lapping up portfolios of premium yield generating assets across commercial, retail, warehousing and industrial land segments,” it said