PE-VC exit offers rebound in Q3 2020

2020/11 17 10:11

The variety of PE-VC exits in Q3 of 2020 rose to 40, the identical as in Q1 2020. In Q2, the variety of PE-VC exit offers dropped to 17, the bottom within the final 20 quarters.

The variety of VC exits additionally jumped again to 16 offers in Q3 from 9 in Q2, however didn’t fairly attain Q1 ranges of 23 offers.

The quantity concerned within the exit offers in Q3, nonetheless, was decrease than in Q1, the info confirmed.

Additionally learn: With Covid-19, PE investments in key healthcare segments at a feverish pitch

As an illustration, for PE-VC exits, the quantity in Q1 was $2,532 million, whereas in Q3, it dropped 38.5 per cent to $1,558 million. Likewise, for VC exits, the quantity was $299 million in Q3, a 33.7 per cent drop from Q1’s $451 million. And on a year-on-year foundation, the dip was even greater. In Q3 2019, PE-VC exits amounted to $three,762 million by way of 49 offers, and VC exits stood at $1,918 million by way of 22 offers.

“Usually, PE/VCs maintain on to their investments throughout an financial disaster or downturn as a result of lower in valuations, which was witnessed in Q2 when the influence of the Covid-19 pandemic was at its peak, following a nationwide lockdown. Nevertheless, by the appearance of the third quarter, financial exercise confirmed restoration and sure sectors and segments remained unaffected. Sentiments have been buoyed by studies of assorted governments claiming to deliver vaccines by the top of this yr. Sectors like telecom, healthcare, fintech, and on-line gaming witnessed large traction within the early second half of 2020 due an increase within the digital economic system that led to elevated deal exercise, which additionally resulted in some exit offers,” stated Apoorva Ranjan Sharma, Co-founder & President, Enterprise Catalysts, an incubator for start-ups.

Exits are usually performed to supply early buyers, founders and workers a chance to get some liquidity. PE-VC exit offers represent exits by way of open market transactions and mergers and acquisitions (M&As). Open market transactions usually embrace public market sale and PE-VC-backed preliminary public choices (IPOs), whereas M&As embrace offers akin to buyback, strategic sale and secondary sale purchases.

Additionally learn: Non-public fairness investments hit document excessive of $28.66 billion in 2020

VC exit offers are usually a subset of the PE-VC exit offers. In addition they embrace the identical elements because the PE-VC offers, however just for exiting buyers with respect to VC investments. VC exit offers usually represent Seed to Collection D investments in corporations which might be lower than 10 years outdated and the quantity is capped at $20 million.

“Within the funding enterprise, timing an exit just isn’t all the time straightforward. Timing turns into much more unpredictable in instances of a pandemic,” stated Pankaj Raina, Managing Director, Analysis and Investments, Zephyr Peacock India, including, “Since there was a chance as funding exercise started to renew, buyers who have been nearing their fund life cycle, wanting to enhance distributions, exited.”

“I anticipate funding exercise to select up within the subsequent few quarters. Most of us, together with the entrepreneur universe, have now accepted the brand new regular. We’ll proceed to search out modern methods to assist deal-making actions,” Raina stated.

PE-VC exits

VC exits

Quarter

No. of Offers

Quantity ($ mn)

No. of Offers

Quantity ($ mn)

Q3 2020

40

1,558

16

299

Q2 2020

17

376

9

34

Q1 2020

40

2,532

23

451

Supply: Enterprise Intelligence, Information as of November 2

High PE-VC exits in 2020

Firm

PE Agency(s)

Acquirer

Quantity

($ mn)

Date

SBI Playing cards & Fee Providers

Carlyle

Open Market Transaction

951

Mar-2020

Essel Propack

Blackstone

Open Market Transaction

253

Sep-2020

WhiteHat Jr

Nexus Enterprise Companions, Omidyar Community, Owl Ventures

Byjus Courses

143

Aug-2020

Intas Prescribed drugs

Capital Worldwide

ChrysCapital

132

Feb-2020

AU Small Finance Financial institution

IFC, ChrysCapital

Open Market Transaction

124

Mar-2020

Supply: Enterprise Intelligence, Information as of November 2


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