PE-VC companies invest $5.9 billion across 164 deals in the Q4FY20

Privatee equity-venture capital (PE-VC) firms invested $5.9 billion across 164 deals in the quarter ended March 2020, 36 per cent lower than the $9.2 billion across 249 transactions during the same period last year.

Investments in the first quarter of 2020 were also 37 per cent lower compared to the previous quarter, which saw $9.4 billion being invested across 227 transactions, according to Venture Intelligence Data. These figures include venture capital investments, but exclude PE investments in real estate.

The latest quarter witnessed 14 PE-VC investments worth $100 million or more, down from the 20 such transactions in the same period last year. The largest PE-VC investment announced during first quarter of 2020 was the $567 million takeover of power generation company RattanIndia Power by Goldman Sachs and Varde Partners. The second largest investment was SoftBank Vision Fund's $507 million investment in Oyo as part of the budget hotel aggregator's ongoing $2 billion fund raising round.

IT & ITeS companies have led the pack, attracting $1.8 billion across 86 transactions. The SoftBank-Oyo deal was followed by food delivery apps - Zomato (which raised $150 million from China-based Alibaba) and Swiggy (which raised $113 million in a round led by South Africa's Naspers).

The larger energy sector deals saw $1.6 billion being invested across six transactions during the first quarter of 2020. Apart from the RattanIndia deal, Singapore-based Temasek and Sweden-based EQT Group set up a $500 million India-focused renewable energy platform, O2 Power. The third largest energy deal during Q1'20 was Actis' $415 million acquisition of solar energy assets from Acme Cleantech Solutions.

"The Coronavirus-related lockdowns and related stock market mayhem brought new PE-VC investment activity to a virtual standstill towards the end of the quarter," said Arun Natarajan, founder, Venture Intelligence.

"Until there is better clarity on the still unfolding health crisis front, most investors are likely to focus their energies on existing portfolio companies and be very selective in making new investments," he added.

VC Investments down 22% in Q4FY20

Venture Capital investors have pumped in $1.74 billion (across 126 deals) in Indian Startups during the quarter ended March 2020.

The Q4FY20 investments were 22% lower (in value terms) compared to the $2.22 bnillion (across 196 transactions) during the same period last year and 7.5% lower compared to the immediate previous quarter (which saw $1.88 Billion being invested across 176 transactions). Investment volume (or number of investments) has trended down even sharper: 36% compared to Q4FY19 and 40% compared to the previous quarter.

Fintech companies were the most attractive sector for VC investments during Q1'20, attracting 19 investments worth $380 million. The largest fintech investment during the period was a $84 million investment by A91 Partners, Faering Capital and TVS Capital in Fairfax-promoted digital insurance company Digit. The second largest investment was a $74 million round led by Ribbit Capital and Coatue Management in payments enabler BhartPE.

Healthcare and Healthtech companies took the second spot attracting 17 investments worth $282 million. Apart from Curefit, healthcare analytics company Innovacer raised $70 million from Steadview Capital, Tiger Global, Dragoneer, WestBridge, Mubadala and M12 (Microsofts venture fund).

"While VC investors in India seemed to have shrugged off the chilly winds emerging from the US (owing to the WeWork IPO fiasco and Uber stock price slide of late 2019), the Coronavirus contagion infected the ecosystem sharply starting mid-March," remarked Arun Natarajan, founder, Venture Intelligence. "We can expect VC investors to be highly selective when it comes to making new investments in the months ahead and to be focused more on helping existing portfolio companies survive the downturn," he added.