PE investments down 31% by value sequentially in Q1CY22: Refinitiv data

Private equity investments in Q1 2022 totalled $8.03 billion, down 30.7 per cent from $11.59 billion in Q4 2021 but up 88.6 per cent ($4.2 billion) from the same quarter in the previous year.

Private equity (PE) investments plunged 30.7 per cent quarter-on-quarter (QoQ) to $8.03 billion during the March quarter of calendar year 2022 (Q1CY22) from $11.59 billion in Q4CY21, according to Refinitiv. However, they were up 88.6 per cent year-on-year, compared with $4.2 billion in Q1CY21.

The total number of deals, too, declined to 387 in Q1CY21 from 410 in the previous quarter. However, on a year-on-year basis the total number of deals increased 35 per cent from 286 seen in Q1CY21.

Among sectors, internet specific and computer software garnered most of the investments in Q1CY22, with a total investment of $3.5 billion, compared with $1.5 billion in Q1CY21. Sectors such as financial services ($205.8 million), medical/health ($42.3 million), and biotechnology ($6 million) witnessed a decline in Q1, compared with the year-ago quarter.

The top deals during the quarter were led by the $800-million investment in Bjyu’s, followed by $700-milllion investment in Swiggy. The $494.72 million investment in Tata Motors Electric Mobility, $300 million funding raised by NTex Transportation Services (ElasticRun), and $300 million raised by Xpressbees featured in the top-five deals list during the quarter.

Funds located in India saw a 3.6 times jump quarter-on-quarter in the amount raised at $4.45 billion in Q1CY22. However, the number of companies invested in dropped by 60.6 per cent to 28.

“The momentum was driven by several significant factors including a historically low interest rate environment, digital acceleration and transformation, and increasing depth in the start-up ecosystem. There is also substantial capital waiting to be deployed as India-based PE funds raised $4.4 billion so far this year, more than double the amount raised in the first quarter of last year, pushing fundraising activity to more than $21 billion from 2019 to first quarter of this year,” said Elaine Tan, senior analyst at Refinitiv.

A boom in the initial public offering (IPO) market in 2021 also bolstered the PE industry.

“Last year, the buoyant secondary market and record primary listings in India drove confidence in the IPO markets, providing a conducive environment for companies to go public and provide a positive element for start-ups and investors to consider IPO as a viable exit strategy,” added Tan.

However, volatility in the secondary markets in the aftermath of the Russian invasion of Ukraine, and the US Federal Reserve’s decision to aggressively tighten monetary policy has put the brakes on the IPO market.