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Investments by private equity, venture capital firms halves to $4.1 billion in July

PTI     August 13, 2020

Investments by private equity and venture capital firms in Indian companies halved to USD 4.1 billion in July as compared to the same month a year ago, a report said on Thursday.

In June, the investments stood at USD 6.8 billion, consultancy firm EY said in the report. However, if one were to exclude the investments into Jio Platforms, July has been the best month of 2020 with private equity(PE) and venture capital(VC) funds pouring in USD 3.7 billion, it said. The deal activity was low this year even before the novel coronavirus struck, as the economy experienced a slowdown. Stake sales by Mukesh Ambani in telecom and technology venture Jio helped the overall numbers during the peak of COVID-19 pandemic, it noted.

The consultancy firm's partner Vivek Soni said there has been a rebound in PE/VC investment activity and fund raising by dedicated funds in July at USD 2.2 billion is 38 per cent higher than the first six months of 2020. Soni said there continues to be a considerable overhang over the economic activity but given the past experience of investments done immediately post a crisis being the most rewarding, he is cautiously optimistic about an uptick in investments in the next two to three months.

July 2020 recorded 77 deals involving Indian companies which saw investments of USD 4.1 billion as compared to USD 8.4 billion in the year-ago same month, and were majorly led by USD 1.7 billion of buyouts in six transactions, which touched an 11-month high by value. There were 10 large deals of over USD 100 million each last month, which saw inflows of USD 3.1 billion as against USD 7.1 billion in 13 large deals in July 2019, it said.

Technology was the top sector in July with USD 963 million invested across 10 deals followed by financial services (USD 882 million;15 deals) and pharmaceuticals (USD 699 million; 3 deals), it said. Exit activity continued to remain subdued at USD 134 million, primarily comprising open market exits, it said, adding there were no PE-backed IPOs and secondary exits in July 2020.

The largest fundraise in July 2020 saw Sequoia Capital garner USD 1.4 billion for venture and growth capital investments in India and the region, it said.

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