PE/VC investments rise to $10.7 bn in Aug; IPOs drive surge in exits

Investments by private equity and venture capital funds surged to USD 10.7 billion in August from USD 2.2 billion in the same month last year, and USD 9.7 billion in July this year, a report said on Wednesday.

In terms of volume as well, the numbers were up with August recording 137 transactions as against 83 in the year-ago period and 77 in July, the report by industry lobby IVCA and EY, a consultancy, said.

Initial public offers (IPOs) like that of Zomato led to exits worth USD 7.3 billion in August, and took the overall number to USD 30.7 billion in 2021.

"The PE/VC juggernaut continues to roll, propelling both investments and exits to life-time highs within the first eight months of the year," EY's partner Vivek Soni said.

The investments in the first eight months of the year are at USD 47.3 billion, which is almost at par with the previous full-year high recorded in 2020, he said, attributing the rally to activity in the startup space and higher number of buyouts.

Soni said the startup space has seen investments of USD 15.3 billion in 2021, which is already 31 per cent higher than the previous best for an entire year recorded in 2019.

From a sectoral perspective, e-commerce has seen the highest interest accounting for nearly a fourth of all the investments in 2021, and is followed by financial services and technology.

Exits have already surpassed the previous best on the back of 22 IPOs, it said, adding that August recorded 38 deals totaling USD 7.3 billion, as against 25 deals of USD 1.2 billion in July, and USD 67 million in 17 deals in the year-ago period.

"As the percentage of the vaccinated population rises, hopes of economic activity returning to pre-pandemic levels have increased. However, downside risks include a possible pandemic resurgence due to new virus variants, inflation and any hawkish action by the US Federal Reserve to contain it and a potential spike in commodity prices (especially oil)," Soni said.

The total fundraise in August 2021 stood at USD 1.8 billion compared to USD 480 million raised in August 2020, it said.