In the last few years, several private equity (PE) and venture capital (VC) firms have invested in consumer packaged goods (CPG) companies. PE/VC investors have been riding a decade-long growth wave in transaction volumes, valuations and fundraising; however, the current crisis has eroded some of the value of investments and dampened investor confidence.
Consumer goods, household and consumer products as well as FMCG companies should see favor amongst PE/VC investors as high returns often emerge in times like these and can offset the losses during the downturn.
According to VCCEdge, India’s most comprehensive research platform for private markets, notable deal activity in the FMCG sector was seen as Avenue Supermarts (D-Mart) raised $4.86 million in February 2020 and Ador Multiproducts raised $0.29 million in July 2020. The sector also saw another big-ticket deal happening as Hindustan Unilever Ltd. acquired the Horlicks Brand for India for $415.3 million in April 2020.
For the household and consumer products sector, the average deal value recorded in 2020 was $5.07 million as compared to $7.15 million in 2019, a drop of 29%. Honasa Consumer Pvt. Ltd. (Mamaearth) raised $18.22 million thus accounting for another notable deal in the sector in 2020.
VCCEdge reported a drop of 50% in terms of volume and 82% in terms of value in the consumer goods sector. This drop is on account of the pandemic but once the market starts recovering it might unearth golden opportunities in the future for sectors such as consumer goods due to changing consumer preferences.