The private equity and venture capital (PE/VC) activities recorded investments worth $881 million across 65 deals in April, with $347 million invested in start-ups. The reporting month recorded the third straight month of decline in PE/VC investments and the lowest monthly value of deals in 34 months.

Exits recorded $117 million across five deals, with one large $100 million open market exit accounting for 85 per cent of the value of exits, according to an Indian Private Equity & Venture Capital Association and EY (IVCA-EY) report.

“As projected, PE/VC deal activity has continued its declining trend in April 2020. Investments, exits and fundraises are at multi-month lows. Barring one $100 -million-plus deal, few Private Investment in Public Equity (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,” Vivek Soni, Partner and National Leader-Private Equity Services, EY India, said.

Though the 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 centres 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,” 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.

Investments

At $881 million, April 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 declined by 73 per cent y-o-y and 1.9 per cent compared to last month.

In volume terms, deals in April declined 34 per cent YoY and 12 per cent sequentially (65 deals in April 2020 versus 99 in April 2019 and 74 in March 2020).

Like in March, there was only one large deal (value greater than $100 million) worth $204 million in April 2020, compared to eight large deals worth $1.7 billion last year. The largest deal announced in April was the KKR buyout of 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.

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).

PIPE deals worth $119 million across four deals were recorded in April 2020, compared to $588 million across five deals in April 2019.

From a sector point of view, the infrastructure sector ($208 million across two deals) emerged as the top sector 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.

Exits

The reporting month 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 2020 saw Carlyle sell its 13 per cent stake in Metropolis Healthcare for $100 million. Healthcare was the top sector for exits in April on account of this deal.

In April 2020, open market exits were highest at $117 million across two deals, while the deal value for other deals was not available.

Fundraising

For the first time since August 2016, there was no fundraise recorded in April 2020. There has been a precipitous decline in India dedicated fundraises since $742 million was raised in January 2020.

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