Riding on funding worth $1.1 billion in the financial services sector, the private equity and venture capital (PE-VC) industry recorded investments worth $1.9 billion across 75 deals in August.
PE-VC investments last month were 54 per cent lower than the $4.3 billion recorded in August 2019, and 53 per cent lower than the $4.1 billion recorded in July 2020, according to the monthly round-up by the Indian Private Equity & Venture Capital Association and EY (IVCA-EY).
Except for private investment in public equity (PIPE) investments that recorded a 5.4 times year-on-year (YoY) increase ($826 million versus $153 million in August 2019), all other deal types declined significantly.
PIPE deals in August 2020 were the highest in 17 months. Buyout deals recorded $570 million across two deals (49 per cent decline YoY). Growth investments recorded $330 million across 10 deals (79 per cent decline YoY). Start-ups recorded $183 million in investments across 51 deals (87 per cent decline YoY), the lowest value in 18 months, the report said.
The Jio push
“PE-VC investments in August have been muted compared to May, June and July 2020 that had seen a flurry of PE investments, primarily driven by the Jio Platform deals. Although PE-VC investments of $1.9 billion in August are over 50 per cent lower than that in August 2019 as well as July 2020, August 2020 has been better than the sub $1-billion monthly run rate seen in the initial months of the pandemic,” said Vivek Soni, Partner and National Leader Private Equity Services at EY.
“There is a perceptible improvement in investor confidence as the Indian as well as global markets begin to open up,” he added.
August recorded six large deals (value greater than $100 million) worth $1.3 billion compared with 15 large deals worth $3.5 billion in August 2019 and 10 large deals worth $3.1 billion in July 2020. The largest deals in August 2020 saw PAG acquire a 51 per cent stake in Edelweiss Global Investment Advisors, Edelweiss’ Wealth Management business for $300 million.
In August, financial services emerged as the top sector after a gap of three months, recording $1.1 billion in investments across 17 deals, accounting for 55 per cent of all investments.
Infrastructure was next in line with $270 million invested across one deal followed by education with $193 million invested across eight deals and e-commerce with $135 million invested across nine deals. The education sector has emerged as a standout sector in 2020, aggregating $1.1 billion in investments across 45 deals till date, which is the highest-ever annual figure both in terms of value and volume.
Exits worth $67 million
The reporting month recorded 15 exits worth $67 million, the lowest monthly value of exits in over three-and-a-half years. Exits last month were 90 per cent lower than in August 2019 ($680 million) and 50 per cent lower than the value recorded in July 2020 ($134 million). Open market exits in August 2020 were highest at $67 million across nine deals.
The largest exit in August 2020 saw Mayfield sell its 10 per cent stake in Matrimony.com for $17 million.
Fund-raises fall
The month also recorded total fund-raises of $480 million compared with $1.1 billion raised in August 2019, a 58 per cent YoY decline. The largest fund-raise last month saw Lightspeed raise its third fund of $275 million for early stage investments.