Tamil Nadu

Private Equity investments in India surge to all time high but Tamil Nadu sees a drop

Photograph used for representational purposes only

Photograph used for representational purposes only   | Photo Credit: Getty Images/iStock

Tamil Nadu saw a drop of 34.57% in terms of value, in private equity and venture capital investments when compared to last year, as per data collected by a research firm

Though Private Equity investments in India surged to an all time high of $37 billion in 2019, Tamil Nadu has seen a significant drop from last year.

Tamil Nadu attracted Private Equity (PE) and Venture Capital (VC) investments to the tune of $1,531 million across 47 deals for the year 2019. In value terms, there was a drop of 34.57% when compared to last year. In 2018, the State saw investments of over $2,340 million across 64 deals.

Data collated (as on December 29) by Venture Intelligence, a research firm focused on private company financials, transactions and their valuations shows that in 2019, the State saw 14 angel investment deals, when compared to 19 deals the previous year.

Arun Natarajan, founder and managing director,Venture Intelligence, pointed out that in terms of PE-VC investments, the value figures for 2019 and 2018 are quite comparable -- but for the outlier deal of almost $1 billion in Star Health Insurance that took place last year. “Chennai and the rest of Tamil Nadu-based companies continue to attract significant attention from PE-VC investors -- especially in sectors like financial services, enterprise software (including SaaS) and healthcare,” he said.

According to Mr. Natarajan, in a scenario where investors are likely to be more demanding on profitability metrics, companies from the State -- known for their strong business models, frugality and financial savvy -- can be expected to stand out even more prominently.

Overall, PE investments in India rose to their highest ever figure of $37 billion in 2019 across 861 transactions (the data includes VC investments, but excludes PE investments in real estate).

Riding on the back of large ticket infrastructure sector deals, PE investments in 2019 edged past the previous high of $36 billion (across 937 investments) in 2018. This year witnessed 74 PE investments worth $100 million or more (accounting for 74% of the total investment value during the period). Of these, 40 were larger than $200 million each (with 5 investments over $1 billion), Venture Intelligence data shows.

Mr. Natarajan said that the fact that the PE investment tally of 2019 outdid the previous high of 2018 -- despite uncertainties on the economic, political and global trade fronts -- is very encouraging.”

“The sheer diversity of investors that are now actively investing in India – by geography [including North America, Asia and Middle East] as well as sector preferences -- provides scope for optimism that the momentum will be maintained into the new year,” he noted.

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Printable version | Feb 20, 2020 11:57:34 AM | https://www.thehindu.com/news/national/tamil-nadu/private-equity-investments-in-india-surge-to-all-time-high-but-tamil-nadu-sees-a-drop/article30451442.ece

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