M&A transactions shrink by 65% in value
As the effects of COVID-19 continue to unfold, the corporate world has witnessed unique trends in Private Equity, Mergers and Acquisitions and ECM space in Q1 of 2021 which recorded 376 deals worth US$6.6 billion, up from 350 deals done in Q1 2020. The value of these deals also increased by 43% to US$6.6 billion from US$4.6 billion a year ago, as VCCEdge research.
However, Q1 2021 also witnessed the lowest number of deals and deal value in the mergers and acquisitions’ space in the last five years on a Y-o-Y basis. The quarter recorded 184 deals worth US$5.2 billion, a decline of 10% and 65%, respectively, as compared to Q1 2020.
Domestic M&A dominated the show by garnering 118 deals worth US$3.09 billion.
ECM deal activities saw an upward trend in the first quarter of 2021 as the quarter witnessed 26 deals for US$4.61 billion, as against 18 deals worth US$4.85 billion in Q1 2020. The major contributor for ECM deal activities were Initial public offering at 15 deals (US$2.34 billion), followed by qualified institutional placement at 10 deals (US$1.86 billion).
On the other hand, exits experienced a slowdown both in terms of deal activity and deal value for the fifth year in a row on a Y-o-Y basis. This quarter witnessed a decline of 30% and 28% in deal activity and deal value respectively, when compared to same period last year. There were 39 exits worth US$1.51 billion in Q1 2021 as against 56 deals worth US$2.08 billion. Open Market and Mergers and Acquisition is the major route adopted by investors for unlocking their investments.
The quantum of funds launched in Q1 2021 also came down by 9.5%, when compared to Q1 2020, while the targeted capital witnessed a sharp increase of 4.6x (from US$0.53 billion to US$2.48 billion). The amount raised of Q1 2021 was US$1.30 billion as against the US$270 million in Q1 2020.
“Despite the economy slowdown, volatile and uncertain market, PE investors reiterated their confidence in Indian companies. This is evident from the fact that the first quarter of 2021 has received 43% higher funding as compared to the same period last year,” Shalil Gupta, Chief Business Officer, Mosaic Digital – An HT Media Group Company.
“Investors are now looking for companies which are agile, adaptable and at the same time focussing on bringing solutions to the real problems. In 2021, investors will remain bullish in tech enabled companies and more and more deals can be seen in this space,” Gupta said on 10 April 2021.
The EdTech space also witnessed an inflow of funding for Byju’s Think and Learn Pvt Ltd. It raised US$460 million funding from MC Global Edtech Investment Holdings LP, B Capital, Baron Emerging Market Fund, Baron Global Advantage Fund, XN Exponent Holding, Arison Holdings, TCDS (India), and TIGA (India). This round takes Byju’s post-money valuation to a little over US$13 billion.
Another interesting deal which put Sporta Technologies (Dream 11) at centre stage was the funding raised by them. Sporta Technologies (Dream 11) raised US$400 million from Steadview Capital Master Fund Ltd., Tiger Global Management LLC, TPG Tech Adjacencies LP, ChrysCapital Investment Advisors India Pvt Ltd, Footpath Ventures SPV I LP, TCMI Inc, D1 Capital Partners LP and Falcon Edge Capital LP.
With the highest number of deals recorded and dramatic changes in workplace requirements, Information Technology sector is the one to watch. The sector witnessed 214 deals worth US$3.32 billion.
The research expects much more activities on all fronts ranging from IT to EdTech and to even gaming during 2021. #banking #finance #investment #technology /fiinews.com
