Jio Platforms deals a big boost for PE investments

Investments totaling over $9.5 billion in Jio Platforms by a clutch of private equity firms, following social media giant Facebook's $5.7 billion mid-April investment in the company, helped overall.

Private equity and venture capital (PE-VC) investments spread across 341 deals rose by 12 per cent in the first six months of 2020 to $18.8 billion, with Reliance Industries' digital platform Jio Platforms getting 51 per cent of the value.

Investments better the $16.8 billion (across 503 transactions) in the same period in 2019, according to Venture Intelligence, a research service focused on private company financials, transactions and their valuations.

Investments totaling over $9.5 billion in Jio Platforms by a clutch of private equity firms, following social media giant Facebook's $5.7 billion mid-April investment in the company, helped overall.

Jio Platforms' $9.5 billion private equity haul--excluding Facebook’s strategic investment--was led by West Asian and American investors.

KKR, Saudi Arabia's Public Investment Fund and Vista Equity Partners invested $1.5 billion each.

Silver Lake Partners and Mubadala Investment, which invested over a $1 billion each, came net.

H1 2020 witnessed 24 PE-VC investments worth $100 million or more, down from 37 such transactions in the same period last year.

But for the Jio investments, PE-VC investments during H1 2020 would have fallen 45 per cent compared to H1 2019, the Venture Intelligence analysis shows.

At $4.1 billion across 270 deals, venture capital investments fell 11 per cent in value terms (and 31 per cent in volume) compared to the same period in 2019 (which had witnessed $4.6 billion across 393 transactions).

Notably, VC investments shrunk 52% (in value terms) year-on-year to just $1 billion in Q2 2020 (venture capital is defined as investments in start-up companies less than 10 years old).

Telecom accounted for $9.6 billion of the investment pie in H1 2020, with smartphone manufacturer Lava International chipping in with $90 million raised from Global Emerging Markets Group.

IT & ITeS companies came in next, attracting $3 billion, down 43 per cent compared to the $5.3 billion they had attracted in H1 2019.

The first two months of the year saw investors like SoftBank and Naspers leading mega rounds for their unicorn portfolio companies, including budget hotel aggregator Oyo Rooms and food delivery company Swiggy.

With such deals becoming an almost distant memory in Q2'20 thanks to the coronavirus outbreak, the $150 million round attracted by API (Application Programming Interface) development and testing company Postman and the new investment in EdTech company Byju's from the Mary Meeker led Bond Capital (announced at th fag end of the Q2) provided some scope for optimism.

Apart from Postman, the first half of 2020 saw the minting of one more Indian Unicorn startup: cosmetics e-tailer Nykaa (which attracted about $25 million from Steadview Capital and other investors).

"The Coronavirus-related lockdowns and \the overall economic uncertainty had caused a large section of the PE-VC investment community to go into a pause mode--something reflected in the shrinking deal volumes," noted Arun Natarajan, Founder, Venture Intelligence.

"Until there is better clarity on the still unfolding health crisis, most investors are likely to focus their energies on existing portfolio companies and be very selective in making new investments," he said.