- Nair Ventures
The Week That Was for VC/PE Investments in India
Even though the concerns about an impending global slowdown and a persistent downturn in the Indian economy are yet to wane, the trends in the private equity and venture capital market this past week point to encouraging developments as far as investor interest is concerned.
In our last weekly update, we had discussed how PE firms were playing coy when it came to exits in the current economic climate. Although we wouldn't necessarily say that the attitude has undergone any sea change, this week did see an exit or two in the space, coupled with some ramped up funding developments in a few crucial sectors of the economy.
At a time when large swathes of our online population are busy chuckling over the Finance Minister's latest faux pas where she blamed millennials for slowing auto sales, the economy is still struggling to keep its head above water.
In what seems to be a hopeful indicator for the market, we saw investors this week shell out some much-needed cash for the fledgling Housing Finance market.
Aptus Value Housing Finance India Ltd. reportedly raised as much as $122 million in its latest equity funding round, led by existing stakeholder WestBridge Capital.
Recent times have seen credit institutions tightening their purse strings, with banks unwilling to hand out their funds even after recapitalisation, and non banking financial companies facing a disconcerting crunch in liquidity of late.
Even the merger of four PSU banks of late seems to have been too inadequate to battle this effect. Yet, this major capital infusion in a housing finance company stands to flush the market with enough funds to help the housing industry move forward from its current state of stagnancy, and can potentially trigger a positive ripple effect in the economy across the board.
The past week has also not been too bad in terms of interest from foreign players, as American private equity firm Advent International made a move this week to buy up 94% of Indian snack food company DFM.
Giving an exit opportunity to existing backer WestBridge Capital, Advent paid a whopping $118.8 million to acquire 68% stake in the company, while offering to buy another 26% from the company's shareholders from the public market.
Advent International, which has already bagged two VC deals with Indian companies in this month alone, is reportedly discussing a possible acquisition with a third entity as well, marking an aggressive attempt to foray into the Indian space for the US-based investor.
Meanwhile, latest reports revealed that Warburg Pincus' earlier exit from ICICI Lombard this year had brought in huge profits for the marquee investor, which is bound to make exits sound at least a little more palatable for hesitant investors.
This week also saw Chennai-based IT provider Prodapt Solutions raise close to $75 million from London's Affirma Capital, in exchange for an undisclosed minority stake in the growing company.
E-Commerce Leads The Way
While Private Equity deals in the week gone by may not have been numerous, the quality and trends of the new fundings did raise some hope for the depressed market.
The Venture Capital market, on the other hand, also saw some exciting interest from foreign investors and a rise in the bank balances of promising tech businesses.
For starters, e-commerce logistics delivery service Delhivery yielded some equity and a seat on its board to the Canada Pension Plan Investment Board against a $115 million investment.
As of this week, Delhivery is just one of the several e-commerce related players that were flushed with funds in anticipation of the highly profitable festive season approaching Indians.
Walmart's Flipkart also saw fund infusion to the tune of $224.9 million from Flipkart Private Limited, its arm registered in Singapore.
Marsplay, another e-commerce startup, based out of Delhi, raised an undisclosed sum as a part of its Pre-Series A funding round, from the likes of Xiaomi's Alvin Tse and Cadorna Ventures' Jonathan Lau.
Other angel investors also pitched in this round.
With e-commerce wares heating up for the Indian people, pets are not to be left behind either!
Heads up for Tails, an online retailer for a plethora of pet products: food to toys; also took home $10 million in funding from existing backers, high net worth individuals and family offices this week.
The upcoming festive months are posited to give a fresh lease of life to the struggling automobile sector, as more people hopefully queue up to buy cars. However, at the same time, a lack of credit and declining purchasing power in the economy also means that people might opt for cheaper alternatives instead.
This seemingly gives the perfect opportunity to used-car marketplace TrueBil to cash in on its latest $1 million funding from Japanese firm Spiral Ventures, as it improves its existing technology stack and appeals to a wider base of users.
Sector-wise Investment Deals
While e-commerce seemingly topped the charts in terms of Venture Capital investments this week, some other sectors raked in substantial funding as well.
Edutech, for example, saw an uptick,
Mumbai's WhiteHat Jr. raising $10 million from Nexus Venture Partners, Omidyar Network, and Owl Ventures, among others.
The platform, which teaches coding to smart youngsters, is growing quickly, revealing the huge market that lies untapped when it comes to education and training in India, a country with one of the youngest populations in the world.
Fintech continued to be a major beneficiary of funding,
OkCredit, which provides digital applications to micro businesses and claims to be growing at a rate of 100% month-to-month, raised $67 million and bagged the cash from notable investors like Lightspeed Ventures and Tiger Global, both recurring names in India's VC market.
InMobi's lock screen content platform Glance raise $45 million in funding from Mithril Capital, with plans to expand its content offerings and open up new avenues, such as Glance TV.
A remarkable week for advanced tech startups with,
Kawa Space raising an undisclosed amount as a part of its Pre Series A round of funding from PayTM founder Vijay Shekhar
Nocca Robotics, which roped in $1.7 million from angel investors.
Kawa Space is looking to add 18 new satellites to the space, to add to the one it already has, and Nocca Robotics, is trying to expand research, development and manufacturing to expand its offerings of robots that clean solar panels.
The Road Ahead
While the close of this week is leaving us with slightly lifted spirits, the outlook for the next one seems even more favourable, with PayTm looking to invest in Yes Bank, and Reliance Industries hoping to invest in firms working with waste energy and recycling.
Oyo, the homegrown hotel booking service, has already made a foray into the premium hotel space by acquiring a four star property in Jaipur this week, and if its latest acquisitions are anything to go by, we should be seeing some more premium hotel buyouts by the Indian unicorn.
Clearly, we are looking at an exciting time for the Indian business scene, and considering how badly our economy has been struggling, that is definitely something we need!