Why do uncertain times need a certainty of purpose? - EY regular presentation
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Why do uncertain times need a certainty of purpose? Navigate the transformative age with strategy solutions from better-connected consultants. The IVCA-EY monthly PE/VC roundup – January 2021 The better the question. The better the answer. The better the world works.
Our thoughts “ After a record high in 2020, PE/VC investments in January 2021 started on a sombre note, with investments worth US$1.6 billion and exits worth US$313 million. From a sector perspective, for the first time in over two years, e-commerce emerged as the top sector recording investments worth US$689 million. Exit activity continued to remain muted, with January 2021 recording US$313 million in exits, mainly supported by IPO deal activity. January recorded three PE-backed IPOs that saw early investors like Sequoia, True North and Bessemer record successful partial/full exits. In the absence of strategic and secondary deals, IPO’s in the currently buoyant midcap/ small cap equity markets have provided a good exit option to PE/VC investors at favourable valuations. If this recovery in the capital markets sustains and midcap / small cap indices inch further upwards, we expect to see a pickup in PE- backed IPOs and open market exit of PE positions in listed companies. Looking ahead, the deal pipeline remains robust and investment teams of most large and medium sized PE funds are working flat out diligencing and negotiating multiple deals. In our view, the global macro has thrust the India investment opportunity in a favourable position and most PE/VC investors are inclined towards investing increased amounts in larger deals. While there are still concerns on the possibility of a second wave, new mutant virus strains and the complexity of the vaccine rollout, most Indian corporates as well as investors seem to have a positive view. The government too has played its part well by way of an accommodative Budget that is expected to spur growth on the back of increased govt spend and kickstart of the capex cycle. Notwithstanding the slow start to PE/VC investments in January, we expect things to pick up and retain our bullish outlook for 2021 for both PE/VC investments as well as exits. Page 2 17 February 2021 EY analysis of VCCEdge data
In today’s frenetic world, how does private equity set the pace? Learn how EY helps private equity professionals thrive in the transformative age The IVCA-EY monthly PE/VC roundup – January 2021 The better the question. The better the answer. The better the world works.
Key trends
Investments
► PE/VC investments in January 2021 were 35% lower that January 2019 and 77% lower that December 2020
(US$1.6 billion in January 2021 vs. US$2.5 billion in January 2019 and US$7.1 billion in December 2020). The
significant decline in PE/VC investments was primarily on account of fewer large deals.
► January 2021 recorded three large deals (value greater than US$100 million) worth US$680 million compared to
five large deals worth US$1.4 billion in January 2019 and 12 large deals worth US$6.0 billion in December 2020.
The largest deals in January 2021 saw a group of investors including Tencent, Lightspeed and Altimeter Capital
invest US$280 million in Udaan.com, an online B2B trading platform, followed by Tiger Global, Steadview, Fidelity
and others investing US$250 million in Zomato, a platform for online food ordering and delivery.
► In January 2021, growth investments were the largest deal segment with US$717 million recorded across 17 deals
(US$1 billion across 14 deals in January 2019). Start-up investments recorded US$599 million across 52 deals
(US$449 million across 50 deals in January 2019). Buyouts recorded US$150 million in investments in one deal
(US$71 million across three deals in January 2019).
► From a sector point of view, e-commerce emerged as the top sector with US$689 million in investments across 15
deals, accounting for 43% of all investments in January 2021 and second highest value of monthly investments in
the sector in past 18 months. E-commerce has emerged as the top sector after a gap of over two years.
Infrastructure was next in line with US$177 million invested across four deals followed by financial services with
US$176 million invested across 15 deals and pharmaceuticals with US$111 million invested across three deals.
Page 4 17 February 2021 EY analysis of VCCEdge data
Key trends
Exits
► January 2021 recorded nine exits worth US$313 million, 32% lower than the value of exits in January 2019
(US$461 million) and 70% lower than the value recorded in December 2020 (US$1 billion). IPO exits in January
2021 were highest at US$165 million across three deals.
► The largest exit in January 2021 saw Sequoia sell partial stake (8.8%) in Indigo Paints for US$87 million.
Fundraise
► January 2021 recorded total fundraises of US$854 million compared to US$742 million raised in January 2019. The
largest fundraise in January 2021 saw Godrej Fund Management raise US$250 million in the first tranche of its
US$500 million fund to develop prime office buildings.
Page 5 17 February 2021 EY analysis of VCCEdge dataPE/VC monthly headline trends: investments
Total PE/VC investments
US$m #
83 83 7,545 100
8,000 80 6,873 77 7,087
72 76 80
71 71 80
92
6,000 5,439
81 77
4,070 4,289 60
3,860
4,000 60
40
4,917
2,000 4,649 3,303 1,282 20
2,468 1,708 2,210
885 1,138 1,776 1,022 1,599
- 349 0
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21
Value (US$m) # of deals Investment in Jio Platforms Investment in Reliance Retail
US$m
PE/VC investments: split across asset classes
US$m
8,000
7,000 444 685
3 936
6,000 5 2,094
5,000 2,398
15 226
4,000 298
3,000 6,428 1,175
5,434 270 5
2,000 127 4,766 177
898 3,757 62 4,064 3,753
78 234 3 208 2,680 90
1,000 1,492 1,347 8 1,877 1,332
878 930
-
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21
PE/VC investments (other sectors) (US$m) Real estate (US$m) Infrastructure (US$m)
Page 6 17 February 2021 EY analysis of VCCEdge dataPE/VC monthly headline trends: exits
Total PE/VC exits
US$m 19 #
1,500 17 20
16
14 13
12 12 15
1,000 11 11 11
9 9
10
6
500 1,105 974 1034
657 5
461 556
329 286 67 288 313
- 117 134 0
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21
Value (US$m) # of exits
US$m
PE/VC exits - split across asset classes
US$m
1,500
1,000 89
-
524
500 1,016 302 1,034
461 556 129
329 286 355 134
- 2 450 313
-
117 - 159
- 65
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21
Other sectors (US$m) Real estate (US$m) Infrastructure (US$m)
Page 7 17 February 2021 EY analysis of VCCEdge dataPE/VC monthly headline trends: fundraise
Fundraise
US$m #
3,500 10
8
2,800 8
6 6
2,100 6
4 4 4 4 4
1,400 3 3 4
2 2,195 2
1,476 2,374
700 742 2
- 854
603 85 0 50 121 480 93 19
- 0
Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21
Total funds raised (US$m) Total # of funds raised
Page 8 17 February 2021 EY analysis of VCCEdge dataPE/VC investments: US$1,332 million over 73 deals (excluding
infrastructure and real estate investments)
Top sectors by value US$m Top sectors by volume
E-commerce 689 E-commerce 15
Financial services 176 Financial services 15
Technology 9
Pharmaceuticals 111
Education 8
Media and entertainment 81
Healthcare 5
Food and agriculture 72
Pharmaceuticals 3
Others 203 Others 18
Deal value US$m (volume) Deal type US$m (volume)
599 (52) 627 (12)
530 (2)
311 (9)
212 (3)
153 (43) 126 (8)
94 (8)
0 (0) 12 (1)
US$100m Credit Buyout PIPE Start-up/ Growth
US$20m US$50m US$100m investment Early stage capital
* PIPE: Private investment in public equity
Page 9 17 February 2021 EY analysis of VCCEdge dataInfrastructure and real estate investments: US$ 267 million over
seven deals
By value US$m By volume
Real estate 90 Real estate 3
Infrastructure 177 Infrastructure 4
Deal value US$m (volume) Deal type US$m (volume)
150 (1) 150 (1)
90 (5)
51 (2) 58 (1)
27 (1)
8 (1)
NA (NA) NA (NA) NA (NA)
US$100m Credit Buyout PIPE Start-up/ Growth
US$20m US$50m US$100m investment Early stage capital
Page 10 17 February 2021 EY analysis of VCCEdge dataTop PE/VC investments
Top PE/VC investments excluding infrastructure and real estate in January 2021
Company PE investors Sector Stage US$m Stake (%)
Altimeter Capital, GGV Capital,
Trustroot Internet Private Limited DST Global, Lightspeed Venture
E-commerce Start-up 280 NA
(Udaan.com) Partners, Tencent Holdings and
others
Tiger Global, Kora Investments,
Zomato Private Limited E-commerce Growth Capital 250 NA
Steadview, Fidelity and others
Biocon Biologics Limited ADQ Investment Management Pharmaceuticals Growth Capital 76 1.8
Media and
Nazara Technologies Limited Plutus Wealth Management Growth Capital 68 NA
entertainment
MedPlus Health Services Private
Warburg Pincus E-commerce Growth Capital 68 25
Limited
Sorting Hat Technologies Private Steadview Capital, General
Education Start-up 50 NA
Limited (Unacademy) Atlantic, Tiger Global and others
Page 11 17 February 2021 EY analysis of VCCEdge dataTop infrastructure and real estate investments
Top infrastructure and real estate investments in January 2021
Company PE investors Sector Stage US$m Stake (%)
Sterlite Power Transmission
Power and
Limited, 5 Energy Transmission AMP Capital Buyout 150 50
utilities
Projects
Hubtown Limited’s Luxury
Oaktree Capital Management Real estate Growth Capital 58 NA
Residential Project in Mumbai
Page 12 17 February 2021 EY analysis of VCCEdge dataExits: US$ 313 million across nine deals in January 2021
Exits in Jan 2021
Deal value US$m (volume) Deal value US$m (volume)
165 (3)
Financial services 226 (4)
137 (2)
Chemicals 87 (1)
E-commerce NA (1)
RCP* NA (1)
NA (1)
NA (NA) NA (NA)
Others NA (2)
IPO Buyback Strategic Secondary Open
market
* RCP: Retail and consumer products
Page 13 17 February 2021 EY analysis of VCCEdge dataTop exits
Top exits in January 2021
Company Sector Sellers Buyer Exit type US$m Stake (%)
Indigo Paints Retail and consumer Sequoia NA IPO 87 8.8
Max Financial Services
Financial services KKR NA Open market 86 3.6
Limited
Home First Finance Bessemer Venture
Financial services NA IPO 77 12.3
Company India Limited Partners, True North
Khazanah Nasional
IDFC Limited Financial services NA Open market 51 5.5
Berhad
Page 14 17 February 2021 EY analysis of VCCEdge dataFundraise
Top fundraise/announcements in January 2021
Status Fund US$m Strategy
Raised Godrej Fund Management 250 Office building platform
Raised TVS Shriram Growth Fund 3 212 Sector agnostic
Strategic services, urbanisation and
Raised Tata Capital Growth Fund II 168
discrete manufacturing
Raised Fireside Ventures - Fund II 118 Early stage – consumer
Announced TVS Capital IV Fund 500 Sector agnostic
B2B software and manufacturing –
Announced Stakeboat Capital 136
Lifesciences
Announced Motilal Oswal Real Estate fifth fund 109 Real estate
Announced N+1 Capital Debt Fund 100 Venture debt
Page 15 17 February 2021 EY analysis of VCCEdge dataAbout EY Private Equity Services
About EY’s Private Equity Services Practice
EY has been working with the private equity industry for more than 25 years, with approximately
25,000 seasoned professionals worldwide dedicated to the industry and its business issues. EY
serves 74% of the top 300 PE firms included in the Global PEI 300 firms list. Private equity firms,
portfolio companies and investment funds face complex challenges. They are under pressure to
deploy capital amid geopolitical uncertainty, increased competition, higher valuations and rising
stakeholder expectations. Successful deals depend on the ability to move faster, drive rapid and
strategic growth and create greater value throughout the transaction life cycle. EY taps its global
network to help source deal opportunities and combines deep sector insights with the proven,
innovative strategies that have guided the world’s fastest growing companies.
In India, EY is among the leading providers of advisory, tax, transactions and assurance services.
The organization is also the number one professional services brand* in India, which is a
testimony to our relentless commitment to deliver exceptional client service and create a better
working world. EY has offices spread across 11 cities in India. Worldwide, our 270,000 people
across 150+ countries and 700+ cities are united by our shared values and their unwavering
commitment to quality.
► EY’s India Private Equity Services Practice has been among the top advisors for private equity
deals over the past ten years. EY has been awarded the “Most Active Transaction Advisor”
award by Venture Intelligence for 2009-2013 and also the “Investment Bank of the Year,
Private Equity” award by VC Circle in 2012 and 2017 and for M&A in 2018. EY was also the
top PE advisor in the Venture Intelligence league table in 2018.
► EY’s India Private Equity Services Practice provides value to PE funds and their portfolio
companies through its deep sector and service expertise. EY India is organized around key
industry verticals in a matrix structure that enables us to offer an unparalleled blend of
industry expertise and functional skills. We actively track about 15 sectors with sector leads
driving our penetration in each of those sectors.
Page 17 17 February 2021 EY analysis of VCCEdge dataEY services for Private Equity
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Page 18 17 February 2021 EY analysis of VCCEdge dataErnst & Young LLP
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