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Private equity and venture capital (PE/VC) investments in January 20201 stood at $1.6 billion across 80 deals, a 35 per cent fall from the same month last year, primarily on account of fewer large deals. From a sector perspective, e-commerce emerged as the top sector recording investments worth $689 million, the first time in over two years.
The investments were 77 per cent lower from December 2020 ($2.5 billion in January 2019 and $7.1 billion in December 2020). The reporting month also recorded three PE-backed initial public offerings (IPOs) worth $165 million, according to a report by Indian Private Equity & Venture Capital Association and EY (IVCA-EY).
Also read: PE-VC investments fell by 8% in January-November
The month recorded three large deals (value greater than $100 million) worth $680 million compared to five large deals worth $1.4 billion in January 2019 and 12 large deals worth $6.0 billion in December 2020. The largest deals saw a group of investors including Tencent, Lightspeed, Altimeter Capital invest $280 million in Udaan.com, an online B2B trading platform, followed by Tiger Global, Steadview, Fidelity and others investing $250 million in Zomato, a platform for online food ordering and delivery.
In January, growth investments were the largest deal segment with $717 million recorded across 17 deals ($1 billion across 14 deals in January 2019). Start-up investments recorded $599 million across 52 deals ($449 million across 50 deals in January 2019). Buyouts recorded $150 million in investments in one deal ($71 million across three deals in January 2019).
With about 15 deals, e-commerce accounted for 43 per cent of all investments in January and the second-highest value of monthly investments in the sector in the past 18 months. Infrastructure was next in line with $177 million invested across four deals, followed by financial services with $176 million invested across 15 deals and then pharmaceuticals with $111 million invested across three deals.
Exits
The month recorded nine exits worth $313 million, 32 per cent lower than the value of exits in January 2019 ($461 million) and 70 per cent lower than the value recorded in December 2020 ($1 billion). IPO exits in January 2021 were highest at $165 million across three deals. The largest exit in January 2021 saw Sequoia sell partial stake (8.8 per cent) in Indigo Paints for $87 million.
Fund-raise
The fund-raise in January stood at $854 million compared to $742 million during the same month of last year. The largest fund-raise was by Godrej Fund Management which raised $250 million in the first tranche of its $500-million fund to develop prime office buildings.
Also read: ‘EdTech start-ups on a roll, raise funding of $2.2 b in 2020’
Outlook
“Looking ahead, the deal pipeline remains robust and investment teams of most large- and medium-sized PE funds are working flat out diligencing and negotiating multiple deals. In our view, the global macro has thrust the India investment opportunity in a favourable position and most PE/VC investors are inclined towards investing increased amounts in larger deals,” Vivek Soni, Partner and National Leader Private Equity Services, EY, said.
“Notwithstanding the slow start to PE/VC investments in January, we expect things to pick up and retain our bullish outlook for 2021 for both PE/VC investments as well as exits,” he added.