The private-equity venture capital investments (PE-VC) in 2021 have witnessed a decent hike of 57.2% compared to the increase of last year i.e., 2020. In India, the private equity and venture capital investments rose to 62.8 billion dollars in 2021, which is the highest investment noticed ever. Private Equity is the type of capital investments made into private companies that are not listed on the public exchange. VC refer to the investments or private equity provided to small firms or startups. Investors can invest in different firms and take an exit by selling these investments in private-equity finance. In other words, venture capital refers to the funds given to entrepreneurship businesses that have high and long-term growth potential.
Private Equity Investments by Year
Private Equity and Venture Capital investments have been rising in India since 2017 when the worth was only 23.9 billion dollars which rose to 62.8 billion dollars in 2021. This is the highest ever investment made in India since 2017. The number of deals has validated a rise from 2017 to 2019 i.e., from 853 to 1,051 investments. In 2018, the number of deals fell from 1,051 to 913. In 2021, total deal volume achieved a remarkable hike of 1,201 investments.
Figure 1: PE-VC investments in India in 2021
(Source: PE Report 2021)
The year 2021 shows a higher than two-fold jump in investments, which is worth more than 200 million dollars. Flipkart received the maximum private equity investment worth 3.6 billion dollars. In total 75 PE-VC investments crossing the $200+ million mark in 2021 were done, which is way higher than 2020 wherein there were just 27 investment deals.
Figure 2: Top PE Investments by companies
(Source: PE Report 2021)
According to the PE Report 2021, the highest PE-VC deal of the year was worth 3.6 billion dollars which was bagged by the homegrown enterprise ‘Flipkart’. The company has completed this deal with Qatar Investment Authority, Antara capital, SoftBank Corp, Tencent, GIC, Franklin Templeton PE, CPPIB, Tiger Global, and some others. The company which has secured the second position is Hexaware Technologies followed by Mphasis, which has secured the third position.
Investments by Industry
Industry-wise, the highest PE investment position has been secured by the IT & ITES industry with 40.7 billion dollars which are way higher than the last year’s investments in this industry which were just 8.6 billion. The IT industry has achieved five times the investment compared to last year. The BFSI industry, healthcare and life sciences, education, manufacturing, sports & fitness, and other industries have also achieved a hike. Just the energy industry has had a fall in investments as in 2020, it was 2.6 billion, which has fallen to 1.4 billion dollars in 2021.
Figure 3: PE Investments by different industries in 2021
(Source: PE Report 2021)
Figure 4: Industries positions in 2021 in terms of PE investment value
(Source: PE Report 2021)
After the IT industry, the runners-up sector in terms of PE investments is Banking, Financial Services, and Insurance (BFSI) with investments of 4.7 billion dollars. Following this, Healthcare & Life sciences industry has secured the third position with investments worth 3.2 billion dollars. The education industry has secured the fourth position with an investment of 2.9 billion dollars in PE.
Figure 5: Top 2 industry leaders of 2021 in PE investments
(Source: PE Report 2021)
Figure 6: Third and fourth runner up in PE investments
(Source: PE Report 2021)
The number of deals in which IT & ITES invested was 829 with a value of 65 per cent. BFSI being the first runner up has done 52 PE deals with a total value of 7% followed by healthcare and education (second runner-up) with 64 deals and 5% value. Education being the third runner up was involved in 31 PE investment deals with 5% of value.
Investment by Stage
As per stages, the Late-stage has secured the top position in PE investments in 2021 with 133 deals worth the value of 20.4 billion dollars. The growth-PE stage has followed this with a value worth 19.6 billion dollars and secured the second position. Buyout being on the third position has done the PE investment deals worth 17.1 billion dollars. Venture capital has achieved the fourth position with 3.1 billion dollars value, Pre-IPO sector has achieved the fifth position with 1.5 billion dollars value. PIPE stage has seen at the lowest with investments worth of value 1.0 billion dollars.
Figure 7: Positions by stage in PE investments in 2021
(Source: PE Report 2021)
Figure 8: Share of PE investments of different stages
(Source: PE Report 2021)
Late being on the first stage has achieved a hike in PE investment value compared to last year. In 2021, the investment was worth the value of 12.2 billion dollars which rose to 20.4 billion in 2021. The stages including Growth-PE, Buyout, VC, and Pre-IPO have also achieved a hike in PE investments in comparison to the investment values of these stages in the previous year i.e., 2020. The PIPE stage has neither achieved hike nor fall by being on 1.0 billion dollars value in PE investments in both the years 2020 and 2021.
Figure 9: The top stage PE investments in 2021
(Source: PE Report 2021)
The graph of PE investments of Late stage demonstrates a hike from 2017 to 2018. From this year to 2020, this stage has seen a fall. The stage has recovered the fall very well in the year 2021 by again achieving a hike with 130 plus investment deals.
Investment by Region
Among the south, north, west, east, and central region, the south region has achieved the top position in PE-VC investments with a value worth 30.7 million dollars. In 2021, as the south region has hit the top position, it became involved in 552 deals. With this, the south region has taken a major chunk of 49% of the graph of all the investments of all the regions in 2021. The overall graph including all the regions has achieved a hike of 300% in PE-VC investments in 2021 compared to 2020. The west region has followed the south region with the second position by achieving investments worth the value of 19.3 million dollars by getting involved in 290 investment deals. The north region has managed to be in the third position by investing in 338 deals, but the investments were worth of value 12.2 million dollars. The east region was involved in 18 deals and secured the fourth position in PE-VC investments by managing to get a 0.5 % share of the graph. The central region is on the lowest involved in just one deal of investments in 2021.
Figure 10: PE-VC investments deals of different regions in 2021
(Source: PE Report 2021)
Figure 11: PE-VC investment value of regions in 2021
(Source: PE Report 2021)
With the investment value worth 30.7 billion and being involved in 552 deals which are the highest among all the regions, in terms of volume as well, the south region has topped the chart of PE-VC investments with 46% share. In the south region, the companies which are based in Bangalore city have been involved in the highest deals i.e., 431 out of 552 deals. This city has generated investments worth the value of 27.0 billion dollars. The chart share of PE-VC investments is followed by the north region, then the west, followed by the east and central region.
Overall Fund Raising
There are majorly three areas of fund focus in PE-VC investments including foreign funds, co-investment, and India-dedicated funds. In 2021, the overall fundraising value has achieved an unexpected fall of 16.3% compared to the year 2020. The overall PE-VC funds (53 funds) raised in the year 2021 are worth the value of only 4.5 billion dollars. In the year 2020, the funds were worth 5.4 billion dollars which were raised just with 31 funds.
Figure 12: Overall Fund-raising including the total number of Funds
(Source: PE Report 2021)
In the overall fund-raising value of PE-VC in 2021, the major contributor was A91 partners, which have helped to raise 550 million dollars. Following A91 partners, Stellaris Venture Partners have contributed 225 million dollars. Competing for this, Jungle ventures has also contributed 225 million dollars in overall PE/VC fundraising in 2021. Apart from the major contributors, the most active investors in India dedicated funds are 2AM Ventures and Sparrow Capital. In global funds, the active investors in 2021 include Goodwater Capital, GSV Ventures, and Valar Ventures.
Conclusion
In 2021, all the ventures have raised 53 funds compared to 31 funds of 2020, but the value of an investment in 2021 has fallen compared to the last year. In 2021, the overall funding has fallen 16.3% which shows that only an increased number of funds does not matter but it is the overall fund-raising worth value that matters the most. Following the trend of hike in PE-VC investments in terms of regions, stages, and industries, a growth of these investments with an increase in overall-fund raising is expected in the upcoming years.