PE-VC funds decline 25% to $11.3 bn in Q2

Mumbai: Private Equity-Venture Capital (PE-VC) investments in India during the quarter (Q2) ended June 30, 2022 at $11.3 billion across 315 deals, registered an over 25 per cent decrease compared to the same period in 2021 (which saw $15.2 billion being invested across 264 deals).

The investment amount was also down almost 30 per cent compared to the immediate previous quarter (which saw $16 billion being invested across 390 deals) and marked three continuous quarters of decline, shows data from Venture Intelligence, a research service focused on private company financials, transactions, and their valuations.

However the PE-VC investment figures for the first six months (H1) of 2022 -at $27.4 billion (across 705 deals) - was 15 per cent higher compared to the same period in 2021 (which saw $23.9 billion being invested across 526 deals).

The latest quarter saw the minting of 4 new Unicorns-Leadsquared, Purplle, PhysicsWallah, and Open Financial Technologies - compared to 11 in Q1'21 and 14 in the immediate previous quarter. Overall, Unicorn startups in India attracted close to $8.5 billion worth of investments in H1'22, - down by 16 per cent compared to the same period last year (which saw $10.1 Billion being invested in unicorn startups).

Talking to Bizz Buzz, Arun Natarajan, Founder of Venture Intelligence, said: "The latest quarterly PE-VC investments numbers, marking three continuous quarters of decline, establishes that the funding slowdown is for real."

The next few months will show how the slowdown will affect individual sectors and stages of funding, he added. The $805-million investment into mobile-based content and news aggregator Unicorn –Dailyhunt (from Sumeru Ventures, Luxor Capital, Ontario Teachers' Pension Plan, Sofina, Baillie Gifford, and CPPIB) - accounted for 7 per cent of PE-VC investment pie in Q2'22.

The other top PE-VC deals of Q2'22 included the $775 million purchase of six toll road projects from Welspun Enterprises by Actis and the $593 million acquisition of IDFC AMC by a consortium comprising PE investors GIC, ChrysCapital, and others.

This was followed by a $304-million pre-IPO fundraise by logistics tech startup Delhivery and a $285 million fundraise by Hindustan Ports, a local arm of UAE-based DP World operating five container terminals in India.

IT & ITeS companies accounted for $6.3 billion of the total investment pie in Q2'22, lower by 39 per cent when compared with Q2'21 (which saw $10.4 billion being invested). This was led by the $805 million fundraise by Dailyhunt (from Sumeru Ventures, Luxor Capital, Ontario Teachers' Pension Plan, Sofina, Baillie Gifford, and CPPIB) and the $270 million raised by Neobank Stashfin (from Altara Ventures, Uncorrelated Ventures, Abstract Ventures, Snow Leopard Technology Ventures, and others). Chinese technology giant Tencent acquired an additional stake worth $264 million in e-commerce player Flipkart from the latter's co-founder Binny Bansal.

The BFSI industry attracted about $1.3 billion in Q2'22 - a 88 per cent spike compared to the $0.7 billion in Q2'21. The acquisition of IDFC AMC by a consortium comprising private equity investors GIC, ChrysCapital, and others for $593 million topped the BFSI list, followed by ADIA's $282 million investment in IIFL Home Finance for a 20 per cent stake.

The Healthcare & Life Sciences industry saw $900 million worth of investments in Q2'22, down by 39 per cent compared to the $1.5 billion invested in Q2'21. ADIA invested $262 million in Ahmedabad-based Intas Pharmaceuticals for a 3 per cent stake. This was followed by a $136 million investment in Dr Agarwals Healthcare by TPG Growth and Temasek.