PE investments slump 39% YoY in Q1 of 2020: Report

Although the first quarter of 2020 witnessed a decline in the number of private equity deals as compared to the last quarter of 2019, the sum of equity invested witnessed a 26 per cent increase compared to the previous quarter.

Internet specific companies continued to attract maximum PE interest, though financial services registered a decline by almost 50 per cent, according to a new report.

In Q4FY19, there were 174 deals with $2,851.10 million as sum of equity invested. The number of deals in Q1 of 2020 were 150, with $3593.33 million equity invested, said the report from Refinitiv Data, a provider of financial markets data and infrastructure. The company is present in 190 countries.

Across India, the sum invested year-on-year (YoY) fell by 39 per cent from $5,914 million in first quarter of 2019 to $3,593 million in 2020.

Drop in fund raising

The report also showed a steep decline in fund raising in India. For the Q1 of 2020 fund raising stood at $495.43 million, compared to $1,781.54 million in last quarter (Q4 2019) and $2,315.09 million of Q1 2019, reporting a fall by 72.19 per cent and 78.6 per cent, respectively.

With 146 deals made in first quarter of 2019 the investment generated was $5,914.36 million. But, in 2020, though there were 150 deals, the investment dropped to $3,593.33 million.

Incidentally, Q4 of 2019 saw 174 deals with $2,851.10 million equity invested. In addition to PE investments, the firm assessed PE fund raising, PE backed exits and also ranked the top ten PE investments for the quarter.

The first three months of the year saw 62 internet specific deals with $2,028.38 million equity invested, according to the report. However, PE fundraising activity in India slumped in first quarter of 2020 with just six companies raising $495.43 million, in sharp contrast to Q1 of 2019 which saw eight companies raising $2,315.09 million.

There was just one PE-backed exit in an Indian company in 2020 with proceeds amounting to $1399.24 million, data showed.

Industry-wise data

In terms of industry-specific investments, internet specific, computer software and financial services saw the maximum investments coming in Q1 of 2020. Investments in the internet specific sector shot up by 60 per cent, but the total number of deals remained the same at 62, year-on-year.

Computer software (+50 per cent YoY), as well as medical/health (+22 per cent YoY) and biotechnology (+14 per cent YoY) were among the sectors that witnessed an increase of sum invested as compared to last year.

PE investments were $17.3 billion in 2019 and fund raising, too, was the highest in 10 years at $7.99 billion.

According to Refinitiv, while 2019 saw the decade's highest investment at $17.3 billion, the 60.5 per cent annual increase is second best to 180.7 per cent increase recorded in 2017, when $13.7 billion were invested compared to $4.9 billion in 2016.

In terms of the number of deals, too, 2019 saw the highest deal count of 616, a growth of over 37 per cent compared to 449 deals in 2018, showed data.

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