Private Equity investment in retail hit 5-year high of $970 million in 2019: Report
The PE investment in the retail sector comprised 19 per cent share of the $5 billion investment in the Indian real estate sector in 2019.Updated: Feb 13, 2020 20:33 IST
Despite sluggish consumer spend, the total private equity (PE) inflows in the Indian retail sector rose in 2019. According to a report by ANAROCK Capital, total inflow in the retail sector was $970 million, the highest in five years.
The PE investment in the retail sector comprised 19 per cent share of the $5 billion investment in the Indian real estate sector in 2019.
According to an earlier report by ANAROCK, global investment kept the Indian real estate sector sailing despite weak demand. Of the $5 billion investment, 55 per cent was foreign, 8 per cent was domestic, while the remaining 37 was joint investment.
The PE inflows in 2019 were highest in five years (2015-2019). The investment in 2015 was over $195 million.
The retail sector witnessed the second highest investment from various PE funds in 2019, while commercial offices topped the funding charts.
The report said that Delhi-NCR (national capital region) garnered the maximum PE-inflow of about $610 million, 63 per cent of the total retail funds in 2019. Delhi-NCR was followed by Hyderabad with 20 per cent share.
“In 2018, retail inflows stood at $355 million, comprising just 7 per cent share of the total PE funds. In the previous five years, after 2019, 2017 saw the second-highest PE inflows in retail at $890 million,” said Shobhit Agarwal, MD and CEO of ANAROCK Capital.
He further said that compared to 2018 total PE inflows in the Indian retail sector witnessed an almost three-fold jump in investments to over $970 million in 2019 from $355 million in 2018.
Apart from the top cities, Tier 2 and 3 cities are also targeted by PE funds since they have an active retail market.
At least 36 per cent, nearly USD 1 billion, retail-focused funds went to cities such as Ahmedabad, Chandigarh, Amritsar, Mohali, Bhubaneswar and Nagpur.
The PE inflows in the Indian retail sector touched $2.8 billion between 2015 and 2019, close to the residential segments’ total PE inflows of $3.4 billion during the period, the report said.
During 2015-2019, Delhi]-NCR received the maximum retail-focused PE inflows of over $750 million.
The second destination to receive PE inflows was MMR (Mumbai Metropolitan Region) with $410 million. Pune received PE inflows of around $150 million, while Bengaluru saw total PE investment of $ 275 million during the period. Hyderabad and Chennai together garnered around $ 230 million from 2015-2019.