Big-ticket deals dominate first half of 2021

Despite the second wave of the Covid-19 pandemic disrupting businesses across sectors, it hasn’t stopped investors from cherry-picking opportunities in the India growth story and parking their funds in companies and startups of different stages. In the first half of 2021 (January 1 to June 15) 17 companies raised funds in the range of $100 million to 500 million, according to a recent PwC India report. Late-stage deals recorded during the period under review also attracted top dollar, including India’s largest education technology company Byju’s raising $785 million and food-delivery platform Swiggy raising $800 million in funding, the report said.

Big-ticket funding in the growth stage helped startups such as Meesho, PharmEasy, and ShareChat achieve the status of unicorn—privately held companies valued at $1 billion, the report noted.

The report titled “Deals In India: Mid-year review & outlook for 2021- Resilience and Recovery” pointed out that private equity (PE) investments in the first half of this year were at an all-time high at $26.3 billion, 19% and 25% higher compared to H2 of 2020 and H1 of 2020, respectively. In the first half of 2020, it was $21.1 billion while the second half of 2020 recorded PE funding of $22.1 billion.

“The surge in deal activity was fuelled by billion-dollar buyouts and numerous large fundraising rounds by startups, boosting many of them into the unicorn club. PE investors are also shifting their focus towards sectors such as technology and healthcare which show stronger potential for growth,” the report said.

Today, India has one of the world’s largest startup ecosystems with over 40,000 startups and more than 50 unicorns. Technology companies dominated the funding space with 16 startups entering the unicorn club between January 1 and June 15 of this year, compared to nine during the corresponding period last year, PwC noted.

The report further pointed out that deal activity between January 1 and June 15, 2021, amounted to $40.7 billion across 710 deals, including both PE and strategic mergers and acquisitions (M&A). The M&A space was dominated by domestic deals with activity worth $6.2 billion being recorded in H1 of 2021.

“Domestic deal activity was driven by a few big-ticket deals, the largest of them being the $1-billion acquisition of Aakash Educational Services by Byju’s. Adani Ports was also a major contributor towards big-ticket deals, acquiring 89.6% stake in Gangavaram Port for $755 million to further expand their logistics network,” the report said, adding that India Grid Trust completed the largest transmission-project deal by acquiring NER-II Transmission from Sterlite Power at $637 million.

The report noted that various timely policy and credit measures announced by the government to revive the economy and make it more resilient, and a stable banking system, have resulted in the growth of positive sentiment within the investor community.