The Private Equity and Venture Capital (PE/VC) industry recorded investments worth $1.7 billion across 74 deals, with $677 million invested as growth capital in February. Exits stood at $321 million across 15 deals, with open market exits accounting for 83 per cent of the total value of exits.

The PE/VC investments and exits fell by more than 30 per cent on a year-on-year (YoY) basis, according to the monthly round-up by the Indian Private Equity & Venture Capital Association and EY (IVCA-EY).

“After a good start to PE/VC investments in 2020, both investment and exit activities declined considerably in February 2020. The decline in value of PE/VC investments is primarily on account of the number of large deals (>$100 m) going down substantially,” Vivek Soni, Partner and National Leader-Private Equity Services at EY India said.

The uncertainty over the impact of COVID-19 is expected to act as a significant headwind to Indian PE/VC investments.

Investments

The PE/VC investments in February 2020 recorded a 24-month low of $1.7 billion. These were 39 per cent lower than the $2.8 billion recorded in February 2019 and 32 per cent lower compared to $2.5 billion in January 2020.

The decline in value was mainly on account of fewer large deals (value greater than $100 million). In terms of volume, the number of deals in February 2020 was 21 per cent higher than in February 2019.

There were five large deals worth $700 million in February 2020, compared to nine deals worth $2 billion last year and five deals worth $1.4 billion in January 2020. This is the lowest aggregate value of large deals in over 19 months. The largest deal announced in February saw General Atlantic invest $200 million in ed-tech company Byju’s, followed by Warburg Pincus’ investment of $150 million in Apollo Tyres.

In February 2020, growth capital deals were the highest in value with $677 million recorded across 15 deals, recording 55 per cent YoY decline ($1.5 billion in February 2019) followed by start-up investments worth $562 million across 44 deals, 3.6 times higher on YoY ($154 million in February 2019) and PIPE investments worth $260 million, 40 per cent YoY decline ($431 million in February 2019).

Buyouts recorded investments worth $209 million across three deals, compared to $187 million across two deals in February 2019.

The education sector with $311 million across five deals emerged as the top sector for the first time due to the large investment in Byju’s, followed by technology ($271 million across 18 deals) and real estate ($232 million across three deals). Financial services, traditionally one of the top sectors, was relegated to the fifth place with $162 million invested across nine deals.

Exits

Exits worth $321 million were recorded in February, 32 per cent lower than the value of exits recorded in February 2019 ($472 million) and 30 per cent lower than in January 2020 ($461 million). The largest exit in February 2020 saw Baring India Private Equity sell its 4.9 per cent stake in Manappuram Finance for $101 million.

In February 2020, open market exits were highest at $266 million across seven deals, accounting for 83 per cent of total exits by value. Financial services sector ($305 million across six deals) was the top sector in February 2020, accounting for 95 per cent of all exits by value.

Fund-raise

The total amount of funds raised in February stood at $603 million compared to $285 million raised in February 2019. The largest fund-raise during the month saw Caisse de dépôt et placement du Québec (CDPQ) and Piramal Asset Management setting up a $300-million platform for credit financing.

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