Investments in e-commerce firms rose 258.31% to $805.36 million in 2013-14 from $224.85 million a year ago
The total digital commerce market in India grew by 33% to reach Rs.62,967 crore (in sales) in 2013 from Rs.47,349 crore in December 2012, according to industry lobby Internet and Mobile Association of India.
India’s slowing consumption story has meant a decline in the interest shown by private equity (PE) and venture capital (VC) investors in consumer product, retail, and restaurant companies, even as it has meant a revival of their interest, which appeared to be fading, in e-commerce firms.
Investments in retail, e-commerce, consumer packaged goods and quick service restaurants rose to $1.142 billion (across 94 deals) in 2013-14, from $855.53 billion (across 107 deals) in 2012-13, according to investment tracker VCCEdge.
Of this, investments in e-commerce firms rose 258.31% to $805.36 million in 2013-14 from $224.85 million a year-ago. Investments in consumer products and restaurants fell by more than half.
Fast-moving consumer goods were the focus of many investors, but with the “consumption story” fading, that is no longer the case, explained Ashish Bhide, executive director, Avendus Capital Pvt Ltd.
“Investors need to get out of a business in five-six years and if the slowdown lasts for two to three years, they know that they will not get the desired returns,” added Bhide.
Growth in the consumer packaged goods industry dropped by nearly half to 9.4% in 2013 from 18.1% in 2012, according to market research firm Nielsen India.
In contrast, e-commerce was the fastest growing segment in the consumer space, albeit on a small base.
The total digital commerce market in India grew by 33% to reach Rs.62,967 crore (in sales) in 2013 from Rs.47,349 crore in December 2012, according to industry lobby Internet and Mobile Association of India.
In 2013-14, Flipkart.com raised $360 million from existing investors Tiger Global Management Llc, Accel Partners and Iconiq Capital, and MIH (a part of South African media company Naspers Group); this is the largest investment in online retail in India thus far.
Santosh Verma, director, investment banking, IDFC Capital Ltd, says e-commerce companies are gaining scale and raising money every six months. Companies such as Flipkart have also attracted US investors that understand the e-commerce space, he added. “The trend of e-commerce attracting a bulk of private equity and venture capital investments should continue for the next couple of years as more sectors such as baby products, apparel and lifestyle are now online,” said Verma.
Still, it isn’t as if investors have gone completely cold on consumer product companies, said a consultant.
“We will continue to see activity in the e-commerce space in the new financial year. Activity will also pick up in fast moving consumer goods and the food space,” said Rachna Nath, executive director, PricewaterhouseCoopers (PwC) India.
Mint reported in March that Pan India Food Solutions Pvt. Ltd, a restaurant operator and owner of the Noodle Bar, Bombay Blue and Copper Chimney brands, is in talks with PE and strategic investors for a stake sale.
Hygienic Research Institute Pvt. Ltd, maker of hair care products Streax and Vasmol, is in talks with strategic investors as it looks at its next stage of growth, said Manish Chhabra, the company’s managing director and chief executive officer.
In the e-commerce space there will be more consolidation as companies look to gain depth, said Nath of PwC.
The total digital commerce market in India grew by 33% to reach Rs.62,967 crore (in sales) in 2013 from Rs.47,349 crore in December 2012, according to industry lobby Internet and Mobile Association of India.
India’s slowing consumption story has meant a decline in the interest shown by private equity (PE) and venture capital (VC) investors in consumer product, retail, and restaurant companies, even as it has meant a revival of their interest, which appeared to be fading, in e-commerce firms.
Investments in retail, e-commerce, consumer packaged goods and quick service restaurants rose to $1.142 billion (across 94 deals) in 2013-14, from $855.53 billion (across 107 deals) in 2012-13, according to investment tracker VCCEdge.
Of this, investments in e-commerce firms rose 258.31% to $805.36 million in 2013-14 from $224.85 million a year-ago. Investments in consumer products and restaurants fell by more than half.
Fast-moving consumer goods were the focus of many investors, but with the “consumption story” fading, that is no longer the case, explained Ashish Bhide, executive director, Avendus Capital Pvt Ltd.
“Investors need to get out of a business in five-six years and if the slowdown lasts for two to three years, they know that they will not get the desired returns,” added Bhide.
Growth in the consumer packaged goods industry dropped by nearly half to 9.4% in 2013 from 18.1% in 2012, according to market research firm Nielsen India.
In contrast, e-commerce was the fastest growing segment in the consumer space, albeit on a small base.
The total digital commerce market in India grew by 33% to reach Rs.62,967 crore (in sales) in 2013 from Rs.47,349 crore in December 2012, according to industry lobby Internet and Mobile Association of India.
In 2013-14, Flipkart.com raised $360 million from existing investors Tiger Global Management Llc, Accel Partners and Iconiq Capital, and MIH (a part of South African media company Naspers Group); this is the largest investment in online retail in India thus far.
Santosh Verma, director, investment banking, IDFC Capital Ltd, says e-commerce companies are gaining scale and raising money every six months. Companies such as Flipkart have also attracted US investors that understand the e-commerce space, he added. “The trend of e-commerce attracting a bulk of private equity and venture capital investments should continue for the next couple of years as more sectors such as baby products, apparel and lifestyle are now online,” said Verma.
Still, it isn’t as if investors have gone completely cold on consumer product companies, said a consultant.
“We will continue to see activity in the e-commerce space in the new financial year. Activity will also pick up in fast moving consumer goods and the food space,” said Rachna Nath, executive director, PricewaterhouseCoopers (PwC) India.
Mint reported in March that Pan India Food Solutions Pvt. Ltd, a restaurant operator and owner of the Noodle Bar, Bombay Blue and Copper Chimney brands, is in talks with PE and strategic investors for a stake sale.
Hygienic Research Institute Pvt. Ltd, maker of hair care products Streax and Vasmol, is in talks with strategic investors as it looks at its next stage of growth, said Manish Chhabra, the company’s managing director and chief executive officer.
In the e-commerce space there will be more consolidation as companies look to gain depth, said Nath of PwC.
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