PE-VC firms invest $26.3 billion in Jan-Sep 2020; down 2 per cent YoY

Investments in RIL subsidiaries deals have managed to arrest the overall decline in PE-VC investment figures in 2020

Private Equity - Venture Capital (PE-VC) firms invested $26.3 billion (across 547 deals) in the first 9 months of 2020. Investments in Reliance Industries Limited subsidiaries have managed to arrest the overall decline in PE-VC investment figures in 2020 to a marginal two per cent compared to $27.4 Billion (across 750 deals) in the first nine months of 2019.

According to Venture Intelligence data, the $12.1 billion invested by global private equity and sovereign wealth funds in Reliance Industries’ Jio Platforms ($9.9 billion) and Reliance Retail ($2.3 billion) accounted for 45% of the total PE-VC investment value in 2020.

This figure excludes the $10.2 billion in strategic investments by Silicon Valley tech giants Google and Facebook. These figures include Venture Capital investments, but exclude PE investments in Real Estate).

With the mega investments in Reliance Jio coming to a pause, PE-VC investments in July-September 2020 (Q2FY21) - $7.0 billion across 168 deals - fell 48% compared to the immediate previous quarter (which saw $13.6 billion across a similar number of deals) and 33% compared to the same period last year ($10.5 billion across 232 deals).

Apart from the investments in Reliance Group, top investments in Q2FY21 include the stressed assets investment by Varde Partners and Goldman Sachs in coal-based power plant operator RattanIndia Power ($567 million), the coming through of the $507 million investment in Oyo Rooms from SoftBank (as a part of its ongoing $1.5 billion round), and the $500 million investment by EQT and Temasek in renewable energy platform O2 Power.

Venture Capital investments fell 18% in value (and 26% by volume) in the nine months ended September 2020 ($6.5 billion across 438 deals) compared to the same period last year ($7.9 billion in 594 deals). The latest quarter however showed green shoots in the VC segment with both foreign (especially US headquartered funds) and India-dedicated funds venturing out to invest $2 billion across 137 deals - up from the $1.4 billion across 134 deals in the immediate previous quarter. (*Venture Capital is defined as investments in startups less than ten years old.)

Led by Jio, Telecom accounted for $10.2 billion of the investment pie during the first nine months of 2020. Bharti Airtel’s data center focused subsidiary Nxtra Data and smartphone manufacturer Lava International chipped in with $235 million and $90 million, respectively.

IT & ITeS companies came in next, attracting $5.2 billion - a 43% fall from the $9.1 billion raised during the same period last year. The industry however witnessed a slew of big ticket investments in the latest quarter - including Zomato’s $250 million investment from Kora Management, Tiger Global and Temasek and fantasy sports platform Dream11’s $225 million raise from TPG Capital, Tiger Global, ChrysCapital and other investors. The SoftBank led $150 million investment in Edtech platform Unacademy created India’s 31st Unicorn and the fourth Unicorn startup minted this year (following Pine Labs, Nykaa and Postman).