PE Investments Registered Decline Of 26% In 9M FY24: Report

Private Equity (PE) Investments have registered a decline of around 26 per cent in the initial nine months of the financial year 2023-24 (9M FY24) as both foreign and domestic investors reported lower activity, stated a report by Anarock.

The Capital Flux report by Anarock further states that the large ticket equity investments have been dominated by office assets in 9M FY24. 

Data centres have been emerging as a new asset class for investment with a value of USD 73 million. Similarly, residential real estate continues as an attractive destination for debt investment in 9M FY24.

The report also highlights an interesting trend where the share of the top ten deals was 87 per cent of the total value of PE investments in 9M FY24 as compared to 76 per cent in 9M FY23.

According to the report, the average ticket size has marginally increased to USD 95 million in 9M FY24 from USD 91 million in 9M FY23. This is largely due to a large deal in which Brookfield India Real Estate Trust (REIT) and Singapore’s sovereign wealth fund Government of Singapore Investment Corporation (GIC) together acquired two commercial assets, one in Mumbai and the other in Gurugram, NCR, from Brookfield Asset Management with an enterprise value of USD 1.4 billion.

Multi-city transactions increased sharply during 9M FY24, dominated by the Brookfield India REIT and GIC. Mumbai Metropolitan Region led the transaction league tables in city-specific transactions, with the region reporting 26 per cent of the investments, amounting to USD 694 million in 9M FY24, against USD 375 million in 9M FY23.

Shobhit Agarwal, Managing Director (MD) and Chief Executive Officer (CEO), Anarock Capital, said, "Domestic AIFs have seen lower activity levels as their favoured asset class residential real estate debt witnessed lower demand for high-cost funds. Strong residential pre-sales and an accommodative stance by state-owned banks have led to reduced demand for capital from the more expensive alternate investment funds (AIFs)."

PE investors continue to prefer equity investments, which is visible from the fact that the PE share stood at a healthy 84 per cent. The commercial real estate sector has seen an increased share in PE deals to 70 per cent in 9M FY24, driven by a single large transaction and reduced activity in residential real estate.

"Investments by foreign investors have increased to 86 per cent in 9M FY24 as compared to 79 per cent in 9M FY23," Agarwal added. He further said that correspondingly, domestic investments decreased to 14 per cent of the total capital inflows into Indian real estate in 9M FY24 at USD 360 million, compared to USD 717 million in 9M FY23.