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

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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.

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 $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 $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 $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 $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 $4.5 billion across 77 deals, while credit investments stayed put at $2.6 billion, it said.

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

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