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Private equity, venture capital funding drops from $9.2bn to $5.9bn in Q4FY20

Private Equity, venture capital funding dips in Q4; COVID-19 may affect future investments

April 02, 2020 / 02:02 PM IST
Representative image

Representative image

Private equity and venture capital funding for Q4FY20 dropped to $5.9 billion from $9.2 billion in the same quarter in FY19, as per a Business Standard report.

The numbers sourced from Venture Intelligence Data showed investments were made via 164 deals, compared to a more active 249 deals a year back, the report added. Among these deals, 14 were worth over $100 million – again a drop from 20 such deals in the same period last year.

The ongoing coronavirus pandemic has particularly hit Q4FY20 hard and till clarity emerges most investors “are likely to focus on existing portfolio companies,” as per Arun Natarajan, founder of Venture Intelligence.

The data, however, discounts deals in the real estate sector, the paper said.

Investments for Q1FY20 were also down by 37 percent ($9.4 billion in 227 deals), it showed. This quarter saw FY20’s largest deals – the $567 million takeover of RattanIndia Power Generation Company by Goldman Sachs and Varde Partners, and SoftBank Vision Funds’ $507 million infusion in OYO.

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Among sectors, information technology (IT) and IT enabled services (ITeS) pulled a $1.8 billion chuck of investment from 86 deals. These included the SoftBank-Oyo deals, Alibaba’s $150 million push for Zomato and Naspers’ $113 million funding for Swiggy.

Energy sector landed in second place with $1.6 billion worth investments in six deals in FY20. These include the RattanIndia deal, EQT Group and Temasek’s $500 million fund for renewable energy platform O2, and Actis’ $425 million in solar company Acme Cleantech Solutions.

For VCs in particular Q4FY20 saw a 22 percent slump in investments at $1.74 billion via 126 deals in startups from $2.22 billion via 196 deals from the same period in 2019. It was also 7.5 percent lower than Q3FY20’s $1.88 billion from 176 deals, the paper noted.

For VCs, fintech ruled the roost garnering $380 million from 19 deals in Q1FY20. This included A91 Partners, TVS Capital and Faering Capital’s $84 million in Digit (digital insurance), followed by Coatue Management and Ribbit Capital’s $74 million backing for BhartPE (payments enabler).

Health and heathtech companies saw $282 million from 17 dealswhere Tiger Global, M12 (Microsoft), Steadview Capital, WestBridge, Mubadala and Dragonner infused $70 million in Curefit’s Innovaccer.

In particular, the IPO and stock debacles with WeWork and Uber discouraged US VCs but did not largely impact their Indian counterparts. The COVID-19 situation, however, has “infected the ecosystem sharply starting mid-March,” said Natarajan. He added that VC would now be “highly selective and focused on helping existing portfolio companies survive the downturn.”
Moneycontrol News
first published: Apr 2, 2020 02:02 pm

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