Bangalore A harsh funding winter looms large over Indian startups, as deals worth less than $100 million close in the week to April 22. The lack of substantial fundraising activity continued for the second time in 2023 with sub-$100 million weekly investments.
The deal value fell from $2.2 billion in the second week of April to just $75 million last week, hitting a seven-week low. Although the Manipal-Temasek deal constituted the bulk of capital for the week ended April 15, the remaining transactions contributed around $200 million.
As per the data collected by VCCircle, the deal volumes also show a similar trend with a significant decline in deal volumes to only 11 deals as compared to 21 deals last week.
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However, merger and acquisition (M&A) activities picked up in terms of volume during the week.
While funding activity appeared to stabilize in February after a nine-year trough in 2022, it has declined significantly since then.
In last week’s biggest deal, aerospace components manufacturer Aequs Pvt. Ltd. raised $27.5 million in an equity round led by mid-market private equity firm Amicus Capital. VCCircle first reported in January that the PE firm had emerged as a prime contender to invest in the company.
Emil Pharmaceutical Industries Pvt. Ltd, raised $18.3 million in a round one from healthcare-focused PE firm Somerset Indus Capital Partners.
Omron Health Care and Sony Innovation Fund, along with The University of Tokyo Edge Capital, Inventus Partners and SG Innovate, have invested $8.5 million in cardiac-focused healthtech startup Tricog Health.
The healthcare sector has attracted a lot of investor interest in the last two years.
According to Bain & Company’s India Private Equity Report 2023, the sector accounted for nearly 8% of total PE and VC investments in India in 2022, or $4.3 billion in deals.
According to the report, the surge in investor interest in India’s healthcare sector can be attributed to the successful exit of some players last year.
The sector saw evictions of around $3.5 billion, increasing its share of the overall eviction market to 16% in 2022.
Big exits such as KKR-Max Health and Everstone-Sahyadri were the talk of the town last year along with initial public offers of Medanta and Rainbow Hospitals in the PE landscape.
According to the Bain report, investors are closely watching diagnostics, healthcare providers, pharmaceuticals and single-specialty service providers for steady returns.
The Series A round led by a Singapore-based fund with artificial intelligence-based platform SwitchOn, along with existing investors P Ventures, Axilor Ventures and Chennai Angels, dominated the early-stage deals.
Hyperlocal content production platform Knocksense also secured funding from Nitish Mittersen, founder of gaming firm Nazara Technologies, as part of the Pre-Series A round.
The week also saw three transactions with undisclosed deal sizes.
Meanwhile, M&A transactions tripled last week with more than nine deals, up from just three deals in the previous week.
Fortis Healthcare Ltd said it has signed definitive agreement with VPS Group to acquire Medor Hospital in Manesar, Haryana. 225 crores ($27.4 million).
Wipro Consumer Care and Lighting, which is part of billionaire Azim Premji’s Wipro Group, also announced the acquisition of Kerala-based ready-to-cook brand Brahmins. The size of the deal could not be ascertained.
Canadian investment firm Fairfax sold a major part of its stake in wealth management firm 360 One WAM Ltd (formerly IIFL Wealth & Asset Management). 210 crores ($26 million).
k.amoghavarsha@livemint.com
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