PE/VC investments and exits recorded all-time highs in India; see major highlights and emerging trends here

In 2021 PE/VC (private equity/venture capital) investments and exits recorded all-time highs of US$77.1 billion and US$43.2 billion, respectively in India, as per IVCA-EY latest report, “PE/VC Agenda: India Trend Book 2022”. The report deals with the PE/VC investment and exit records, as well as the new trends that have emerged in India in this respect.

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There are certain important points in this respect that one should know. These are as follows:

1) In 2021, the Indian PE/VC industry ended with investments of over US$77.1 billion, as the frantic pace of deal making helped drive investment activity across all deal types, sizes, and sectors.

2) In 2021 PE/VC investments were 62% higher than 2020 (154% higher than 2020 excluding the one-off RIL deals), fuelled primarily by pure-play PE/VC investments that increased by 79% y-o-y (200% over 2020 ex RIL deals).

3) While the growth in PE/VC investments was driven by start-up investments of US$28.5 billion, growth in PE/VC exits was driven by large strategic and secondary deals worth US$16.9 billion and US$14.4 billion, respectively.

4) The Indian PE/VC investment activity followed the global trend which saw PE investment activity surpass the trillion-dollar mark for the first time.

5) The total value of global PE investments in 2021 was recorded at US$1.2 trillion, up 96 per cent from 2020.

6) PE/VC exits also recorded an all-time high of US$43.2 billion across 281 exits, rebounding smartly from a five-year low of US$6 billion in 2020.

In this context, some of the new trends that have emerged in 2021 must be highlighted. These are as follows:

1) As start-up and VC investments dominated 2021, new themes like edtech, electric vehicles, gaming, online streaming, and sports-based entertainment recorded a significant PE/VC investment flow of over US$10 billion.

2) The maturing of the Indian PE/VC market has seen PE funds emerge as quasi-conglomerates building businesses, PE funds now set-up investment platforms and adopt a buy-and-build approach. As a result, ad-on investments by PE portfolio companies have recorded an all-time high of over US$10 billion in 2021.

3) PE-backed IPOs were at an all-time high with 44 IPOs raising US$13.1 billion and provided a major liquidity event for PE/VC funds which garnered US$5.1 billion in the offer-for-sale component of these IPOs.

4) A new trend amongst this year’s listings were IPOs from new-age start-ups including Nykaa, Policybazaar, Paytm, etc., overseas listing and listing via the SPAC route.