PE investments drop almost half to $3.7 Bn in first quarter of 2018

Indian startup ecosystem continues to face fund crunch or the funding situation has rather worsened in the year 2018. Private equity (PE) investments fell to almost half (or 49 per cent exactly) during January-March compared to the period last year, according to a report.

Private equity firms pumped in $3.7 billion across 133 deals during the first quarter of 2018 as compared to an investment of $7.3 billion in 200 companies a year ago, according to Venture Intelligence.

Besides, the investment has fallen by 29 per cent from the December 2017 quarter. During October-December, the PE firms invested $5.2 billion across 152 transactions.

The report also highlighted in the last quarter only nine PE investments clocked worth $100 million or more deals each compared to 13 such transactions in the same period last year.

Interestingly, SoftBank — which was the largest investor in 2017 with investments in Flipkart, Paytm, Ola and Oyo — missed even the top ten spot in terms of deals in the first quarter of this year.

In 2018, the only SoftBank-led investment was of worth $61 million in grocery platform Grofers.

The investment in India by the Japanese investment giant so far in 2018 has been the relatively small follow-on investment of $62 million in e-grocer Grofers.

Some of the other major investments happened in BigBasket, Swiggy, and Zomato during the first three months of this year.

In February, BigBasket raised $300 million in a Series E funding round led by Alibaba Group. In the same month, Alibaba-owned entity Alipay has pumped-in $200 million in food tech major Zomato. Another major foodtech player Swiggy also raised $100 million from Naspers and Meituan-Dianping.

However, according to the report, Indian financial conglomerate HDFC Ltd made the largest preferential allotment of worth $1.06 billion to investors including GIC, KKR, Canada Pension Plan OMERS, Carmignac Group and Premji Invest.

The second largest investment was of worth $275 million by TPG Capital in the resultant entity of the proposed merger between Manipal Hospitals and Fortis Healthcare.

In BFSI (Banking, Financial Services, and Insurance) sector, the total investments accounted for worth $1.9 billion across 14 transactions. The sector alone constitutes 51 per cent of the PE investment in the first quarter.

NBFC sector was the second biggest grabber of the investment pie which bagged a total of $1.5 billion.

IT & ITeS companies came in next with $927 million worth of investments across 79 deals, followed by healthcare and life sciences companies which attracted $361 million across 9 transactions.

The development was first reported by Businessline.