Mukesh Ambani’s Reliance helps salvage India’s 2020 PE-VC funding climate even as deal volume declines

Billions of dollars pumped by global investors into Mukesh Ambani’s Reliance helped the country’s private equity-venture capital (PE-VC) investments see an uptick in 2020. The annual investments by PE-VC investors were up only 6.6 per cent to $39.2 billion in 2020 from $36.3 billion in 2019, according to research firm Venture Intelligence. Apart from the strategic investments worth $10.2 billion made by Google and Facebook in Jio Platforms, the $17.3 billion funding by US-based PE and other global sovereign wealth funds in Jio Platforms, Reliance Retail, and Reliance Digital Fibre Infrastructure Trust accounted for 44 per cent of the total PE-VC funding value in 2020. In the absence of the funding raised by Reliance, the 2020 investments would have fallen to $21.9 billion. In terms of volume, investors participated in 814 deals in 2020, down 19.5 per cent from 1,012 deals in 2019.

Excluding Reliance, the top investments of 2020 included $1 billion into container glass packaging manufacturer Piramal Glass from Blackstone and $603 million in online food ordering firm Zomato led by Tiger Global and Kora Management, apart from other investors. Importantly, Q4 posted 37 per cent growth ($11.1 billion across 211 deals) in investments on the back of capital infusion in Reliance Retail and Reliance Digital Fibre Infrastructure Trust over ($8.1 billion in 194 deals) Q3 and 24 per cent in comparison to the year-ago period with $9 billion across 252 deals.

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“The accelerated adoption of digital technologies by both consumers and enterprises attracted investors to telecom, media and technology companies, including in sectors like edtech, e-commerce, and financial services,” said Arun Natarajan, Founder, Venture Intelligence. However, geopolitical compulsions, which led to the marked slowing down of investments from Chinese investors in private Indian companies, was another key ecosystem-altering feature of 2020, according to Natarajan.

With respect to VC investments (seed to series F funding in firms less than 10 years old and in late-stage tech business), there was a drop of 13 per cent in value and 16 per cent in volume. VC deals saw $10.7 billion investment across 694 deals vis-à-vis $12.5 billion in 832 deals. The recovery in PE-VC deal activity was concentrated on large ticket deals (over $100 million) and early-stage investments. While early-stage investments in the fourth quarter increased 48 per cent in comparison to Q2, the second half of 2020 saw 35 PE-VC investments of more than $100 million – after slowing down to 25 such deals in the first half.