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73% yoy dip in venture investments in April: EY

Global consultancy firm, EY, said in a recent report that there was a 73% year-on-year dip in venture investment activity to US$ 881 million (about Rs 6,632 crore) during the month of April 2020. The firm noted that exits by private equity and venture capital funds stooped to a 70 month low by volumes at US$ 117 million in five deals. Further, there were no new LP (limited partners) commitments made either towards India dedicated funds during the last month.

Vivek Soni, EY’s national leader for private equity services, explicates, “Though the Indian Government has begun the phasing-out of the lockdown and announced graded relaxation of mobility restrictions, economic activity is far from being back to normal. With major economic centers around the country being classified as ‘red zones’, business activity recovery is expected to take time.” Soni opines that as uncertainty looms over business continuity, sales forecasts, supply chains and valuations persists, private equity and venture capital (PE/VC) investors are likely to continue with the ‘wait and watch’ approach.

However, the picture is not all that grim and sparks of optimism can be found even in these gloomy times. The larger, well capitalized funds have started formulating strategies to benefit from opportunities and are scouting for investment ideas and the large FDI deals announced by Jio Platforms with Facebook, Silverlake and Vista Partners are expected to boost sentiment.