Impact of COVID-19 Outbreak On Private Equity Firms
As the COVID-19 outbreak continues to impact the business all across the world, the funding by private equity firms in India is going downward. There is a significant decrease in private equity funding in India owning to coronavirus outbreak as investors have put a hold on their plans of funding due to fear of economic fallout in combating the pandemic.
According to a recent report the amount of private equity investment has been declining over the last few months and it has reached 40.3% in March. Further, foreign investors are also pulling back their money. March month has been very sluggish due to pandemic with private equity investment seeing a drop of more than 50% compared to February 2020. Owning to the widespread uncertainty and economic slowdown due to the spread of COVID-19 and the lockdown implemented to contain it, investors have put a hold on their investments and took a wait-and-watch approach to assess the situation. Even the top private equity firms in India are abstaining from making heavy investments in the current situation due to fear of probable loss.
However, due to the COVID-19 pandemic, focus on the healthcare sector and investment opportunities in hospitals, pharmaceuticals, diagnostic, and health tech have increased manifolds. Healthcare companies are investing heavily and Quadria Capital, one of the top private equity firms in Singapore and Asia Pacific reason is providing funds for companies to innovate new and world-class healthcare services.
It is also true that fundraising and investment will take a toll because of heavy reliance on Chinese venture capital firms. Restrictions imposed on international travel will also be one factor among less investment. However, many investment opportunities will come up despite economic slowdown. Sectors such as healthcare, fintech, IT/ITes, etc. are will provide better investment opportunities for investors. Hence, we can say not all is lost due to the current pandemic and the world economy will recover over time.