PE/VC investments record third straight month of decline at $881 mn

From a sector point of view, infrastructure sector ($208 million across two deals) emerged as the top sector due to the large buyout of solar assets by KKR
At $881 million, April 2020 recorded the third straight month of decline in PE/VC investments in 2020 and the lowest monthly value of deals in 34 months. In terms of value, PE/VC investments in April 2020 dropped by 73 per cent year on year. In term of volume, deals in April 2020 declined 34 per cent year on year and 12% sequentially (65 deals in April 2020 vs. 99 in April 2019 vs. 74 deals in March 2020). 

 
According to EY report, like in March 2020, there was only one large deal (value greater than $100 million) worth $204 million in April compared to eight large deals worth $1.7 billion last year. The largest deal announced in April saw KKR buyout five solar assets of 317 MW capacity from Shapoorji Pallonji Infrastructure for $204 million.

In April, all deal types recorded significant decline in value invested on a YoY basis. The start-up deals were the highest in value in April with $347 million recorded across 44 deals, a decline of 61 per cent YoY ($899 million in April 2019) followed by growth investments worth $205 million across 14 deals, 59 per cent YoY decline ($505 million in April 2019) and a single buyout worth $204 million, 76 per cent YoY decline ($865 million in April 2019). Private investment in public equity (PIPE) deals worth $119 million across four deals were recorded in April compared to $588 million across five deals in April 2019.

From a sector point of view, infrastructure sector ($208 million across two deals) emerged on top due to the large buyout of solar assets by KKR, followed by financial services ($168 million across eight deals) which had the large PIPE deal where GIC invested $99 million in Bandhan Bank and e-commerce ($145 million across 10 deals) which saw some big investments in the hyperlocal delivery of food/essential services companies – Swiggy and Bigbasket.

Vivek Soni, Partner and National Leader - Private Equity Services, EY India said that as projected, PE/VC deal activity has continued its declining trend in April. Investments, exits and fundraises are at multi-month lows.

Barring one $100 million plus deal, few PIPE/open market deals and a couple of start-up deals in the food/essential services delivery space, most other segments didn’t record noteworthy deal activity. As anticipated, no fresh LP commitments were made towards India dedicated funds in April.

Though the Indian Government has begun the phasing-out of the lockdown and announced graded relaxation of mobility restrictions, economic activity is far from being back to normal. With major economic centers around the country being classified as ‘red zones’, business activity recovery is expected to take time.

"We believe PE/VC investors would continue with the ‘wait and watch’ approach as uncertainty around business continuity, sales forecasts, supply chains and valuations persists," said Soni.

He added, on the positive side, the larger, well capitalised funds have started formulating strategies to take advantage of opportunities and are scouting for investment ideas. The large FDI deals announced by Jio Platforms with Facebook, Silverlake and Vista Partners are expected to boost sentiment as the Who’s Who of Silicon Valley begins to recognize the potential of a digitally connected India.

Exits

 
The month of April recorded five exits worth $117 million, lowest value of exits in 41 months and the lowest number of exits in 70 months. On a YoY basis exits were down by 91 per cent in value ($1.3 billion in April 2019) and 89 per cent lower than March 2020 ($1.1 billion).

The largest exit in April saw Carlyle sell its 13 per cent stake in Metropolis Healthcare Limited for $100 million

In April, open market exits were highest at $117 million across two deals, while the deal value for other deals was not available.

Healthcare was the top sector in April on account of the $100 million exit by Carlyle from Metropolis Healthcare Limited.



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