Zomato, Byju’s, Dream11, others lead 85% PE-VC funding jump in Q1 2021 even as deal volume declines

Private equity and venture capital investments in India have made a strong comeback during the first quarter of 2021 vis-à-vis the year-ago period and the preceding quarter (Q4 2020). Led by Zomato, Byju’s, Dream11, and NBFCs such as Dewan Housing Finance and Altico Capital, the quarter witnessed $11.85 billion poured, up around 85 per cent from $6.54 billion in Q1 2020, according to the data from Venture Intelligence. However, the deal volume or the number of deals contracted by 21 per cent to 199 from 244 during the said period. Similarly, the deal value was higher 58 per cent in Q1 2021 from $7.7 billion in Q4 2020 while deal volume was down 19 per cent from 237 in the previous quarter.

The investors’ appetite to back high scale technology startups gained momentum in Q1 2021 on the back of $400 million and above rounds of investments attracted by Zomato, Byju’s, and Dream11. While Zomato had raised $500 million, Byju’s and Dream11 secured $460 million and $400 million respectively, according to the data. Moreover, 18 private equity investments during the quarter were worth $100 million or more in comparison to 14 such deals during the year-ago period.

“The global liquidity is the big reason for strong deal flow. Moreover, this whole SPAC phenomenon is also a function of this liquidity and it is all coming mainly from the US. As long as that continues, the deal flow would be strong. If something negative happens in the US and because of that private market gets affected as well, that will come very quickly to India because unlike earlier, there is no counterbalance to Chinese investors. So, if the US sneezes, we will catch a cold,” Arun Natarajan, Founder, Venture Intelligence told Financial Express Online.

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Top investments during Q1 2021 included two distressed asset deals in the financial sector, first, $5.2 billion buyout of the Dewan Housing Finance or DHFL by Piramal Enterprises, and second, the $380 million buyout of realty focused Altico Capital by Hong Kong-based Ares SSG. The top sectors in terms of investments attracted during the quarter were BFSI with over $6 billion, IT & ITeS with $4 billion, $486 billion in education, $390 billion in healthcare and life sciences, and $348 billion in shipping and logistics. Further, there were eight domestic IPOs of PE-VC backed companies including Nazara Technologies, Craftsman Automation, Indigo Paints, etc., along with the merger of Goldman Sachs Group-backed Renew Power with a Nasdaq-listed Special Purpose Acquisition Company (SPAC) RMG Acquisition Corporation II (RMG II) kept exit activity alive during the quarter.