PE, VC investments jump to all-time high of $77 bn in 2021: Report

Private equity and venture capital funds invested $77 billion in Indian companies in 2021, a jump of 62 per cent over the previous year, a report said on Tuesday.

Private equity and venture capital funds invested USD 77 billion in Indian companies in 2021, a jump of 62 per cent over the previous year, a report said on Tuesday.

Going by a number of deals, there was a 37 per cent growth to 1,266 transactions, the report by industry lobby IVCA and consultancy EY said.

The year saw a massive glut of liquidity across the world coming out of the pandemic, which led to higher investments in many assets and a surge in valuations.

The consultancy firm's partner Vivek Soni said there was a pick-up in investments from early on itself, which surged in the second half of the year gone by.

Investments in start-ups was a defining feature of 2021, with USD 28.8 billion in funding which accounted for 37 per cent of the overall PE/VC investments, the report said.

It added that the year also saw an addition of 44 unicorns or start-ups valued at over USD 1 billion, making India the third-largest home for such companies.

One of the biggest reasons for the strong performance of PE/VC investments was the sharp increase in pure-play PE/VC investments or investments in sectors excluding real estate and infrastructure, which jumped 79 per cent to USD 67 billion in 2021, it said.

After recording a significant decline amid the pandemic in 2020, buyouts recorded a strong rebound and were the second-largest deal type with USD 22 billion recorded across 63 deals, which is the highest ever by the quantum of value.

Private investment in public equity (PIPE) deals increased 46 per cent to USD 4.5 billion across 77 deals, while credit investments stayed put at USD 2.6 billion, it said.

In 2021, exits recorded an all-time high of USD 43.2 billion, more than seven times the value recorded in 2020 and 60 per cent higher than the previous high of USD 27 billion recorded in 2018, it said.

However, when it comes to fundraisings for future investments, there was a six per cent decline to USD 7.7 billion in 2021, the report said.