PE firms pour USD 75 bn in 2021; Swiggy, FirstCry, Mphasis & Zomato top the list- Mohit Ralhan decodes trends

The Private Equity (PE) industry has invested more than USD 75 billion in 2021, making it one of the strongest years for PE investments. More significantly, it was a growth of about 57 per cent in comparison to the successful year of 2020.

In terms of sectors, technology, e-commerce, financial services, and infrastructure were the largest, accounting for more than 50 per cent of total investments.

The COVID-19 pandemic disrupted several businesses across sectors and increased the demand for equity funding.

It also resulted in moderation of the entry valuations for private equity firms. Early-stage investment and buyouts were the primary focus areas in 2021, showing mammoth growth in comparison to last year.

We spoke to Mohit Ralhan, Managing Partner & Chief Investment Officer of TIW Private Equity on how the investment pipeline is looking for 2022:

The investment in early-stage companies topped up the USD 25 billion mark which was an increase of 5x over 2020. The buyout investments were close to USD 22 billion, growing by 4.8x over 2020.

This seemed quite logical since in a macro environment where nominal growth has been under continuous pressure, the path to higher equity returns either passes through business disruptions, that can be achieved by backing startups or meaningful operating interventions which can be achieved by buyout funds.

2021 started low with January and February turning out to be slower months, but investment activities picked up a significant pace from March.

E-Commerce emerged as a significant focus area as COVID-19 accelerated the adoption of digital sales channels. 

There were a few large investments including USD 800 million investment by QIA, GIC, Goldman Sachs, Naspers, and others in Swiggy, USD 313 million investment by Chrys Capital, TPG and Premji Invest in FirstCry, USD 280 million investment by Tencent, Lightspeed and Altimeter Capital in Udaan.com, and USD 250 million investment by Tiger Global, Steadview, Fidelity and others in Zomato.