PE investments rocket 43% in Q1, exits tank by a quarter, whilst M&A transactions shrink by 65% in value

PE investments rocket 43% in Q1, exits tank by a quarter, whilst 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. 

As per VCCEdge research, Q1 of 2021 recorded an incline with 376 deals worth $6.6 billion when compared with the 350 deals recorded in Q1 2020. While the number saw an incline, the deals’ value also increased by 43% from $4.6 billion to $6.6 billion. 

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 $5.20 billion, a decline of 10% and 65% respectively as compared to Q1 2020. Domestic M&A dominated the show by garnering 118 deals worth $3.09 billion. 

A notable development in the space happened between Wipro and Capco. Wipro Ltd. entered into an agreement to acquire The Capital Markets Company N.V. (Capco) from Fidelity National Information Services Inc. for $1,450 million. This acquisition will make Wipro one of the largest end-to-end global consulting, technology and transformation service providers to the banking and financial services industry. 

ECM deal activities saw an upward trend in the first quarter of 2021 as the quarter witnessed 26 deals for $4.61 billion, as against 18 deals worth $4.85 billion in Q1 2020. The major contributor for ECM deal activities were Initial public offering at 15 deals ($2.34 billion), followed by qualified institutional placement at 10 deals ($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 $1.51 billion in Q1 2021 as against 56 deals worth $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 $0.53 billion to $2.48 billion). The amount raised of Q1 2021 was $1.30 billion as against the $270 million in Q1 2020. 

The EdTech space also witnessed an inflow of funding for Byju’s. Think and Learn Pvt. Ltd. (Byju’s) raised $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 $13 billion. 

Another interesting deal which put Sporta Technology (Dream11) at centre stage was the funding raised by them. Sporta Technologies (Dream 11) raised $400 million from Steadview Capital Master Fund Ltd., Tiger Global Management LLC, TPG Tech Adjacencies, L.P., ChrysCapital Investment Advisors India Pvt. Ltd., Footpath Ventures SPV I LP, TCMI, Inc., D1 Capital Partners L.P. 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 $3.32 billion. 

Download this report by VCC Edge to for an in-depth look at the Deal ecosystem for Q1 of 2021.