Reliance deals arrest overall decline in PE-VC investment in 2020

Private Equity - Venture Capital (PE-VC) firms invested $26.8 billion (in 547 deals) in the first 9 months of 2020. Reliance deals have managed to arrest the overall decline in PE-VC investment figures in 2020 to a marginal 2 per cent compared to $27.4 billion (in 750 deals) in the corresponding period of the last year.

According to Venture Intelligence data, the $12.1 billion invested by global private equity and sovereign wealth funds in Reliance Industries’ Jio Platforms ($9.9 billion) and Reliance Retail ($2.3 billion) accounted for 45% of the total PE-VC investment in 2020.

This figure excludes the $10.2 billion in strategic investments by Silicon Valley tech giants Google and Facebook. These figures
include venture capital investments, but exclude PE investments in real estate.

With the mega investments in Reliance Jio coming to a pause, PE-VC investments in July-September 2020 (Q3FY20) - $7.0 billion in 168 deals - fell 48% compared to the previous quarter (which saw $13.6 billion in a similar number of deals) and 33% compared to the same period last year ($10.5 billion in 232 deals).

 

Apart from the investments in Reliance Group, top investments in Q3FY20 include the stressed assets investment by Varde Partners, Goldman Sachs' investment in coal-based power plant operator RattanIndia Power ($567 million), SoftBank's $507 million investment in Oyo Rooms (as a part of its ongoing $1.5 billion round), and the $500 million investment by EQT and Temasek in renewable energy platform O2 Power.

Venture capital investments fell 18% in value (and 26% by volume) in the 9 months ended September 2020 ($6.5 billion in 438 deals) compared to the same period last year ($7.9 billion in 594 deals). The latest quarter, however, showed green shoots in the VC segment with both foreign (especially US-headquartered funds) and India-dedicated funds investing $2 billion in 137 deals - up from the $1.4 billion in 134 deals in the previous quarter. (*Venture capital is defined as investments in startups less than ten years old.)

Led by Jio, telecom accounted for $10.2 billion of the investments during the first 9 months of 2020. Bharti Airtel’s data center-focused subsidiary Nxtra Data and smartphone manufacturer Lava International chipped in with $235 million and $90 million, respectively.