COVID-19 hits private equity investments hard

Investments

At US$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 declined by 73% y-o-y and 1.9% compared to last month. In term of volume, deals in April 2020 declined 34% y-o-y and 12% sequentially (65 deals in April 2020 vs. 99 in April 2019 vs. 74 deals in March 2020). 

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

In April 2020, all deal types recorded significant decline in value invested on a y-o-y basis. Start-up deals were the highest in value in April 2020 with US$347 million recorded across 44 deals, a decline of 61% y-o-y (US$899 million in April 2019) followed by growth investments worth US$205 million across 14 deals, 59% y-o-y decline (US$505 million in April 2019) and a single buyout worth US$204 million, 76% y-o-y decline (US$865 million in April 2019). Private investment in public equity (PIPE) deals worth US$119 million across four deals were recorded in April 2020 compared to US$588 million across five deals in April 2019.

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

Exits

April 2020 recorded five exits worth US$117 million, lowest value of exits in 41 months and the lowest number of exits in 70 months. On a y-o-y basis exits were down by 91% in value (US$1.3 billion in April 2019) and 89% lower than March 2020 (US$1.1 billion). 

The largest exit in April 2020 saw Carlyle sell its 13% stake in Metropolis Healthcare Limited for US$100 million.

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

Healthcare was the top sector in April 2020 on account of the US$100 million exit by Carlyle from Metropolis Healthcare Limited.

Fund raise

There was no fundraise recorded in April 2020. This is the first time since August 2016 that we are witnessing a month in which nil India dedicated funds have been raised. There has been a precipitous decline in India dedicated fundraises since US$742 million was raised in January 2020. April 2019 had recorded fundraises worth US$682 million.