Private equity (PE) and venture capital (VC) firms have harvested a record $41.3 billion across 275 exit deals in 2021, thanks to increasing liquidity events triggered by a free flow of global capital to the country.
The numbers mark a 68 per cent jump over the previous record of $24.6 billion in 2018, according to data from Praxis Global Alliance, a management consulting and advisory services firm based in India.
Titled India Investments Pulse 2021, the report said fundraise by VC/PE backed companies via IPOs increased 6.4x from 2020 to 2021 and offer for sale jumped to $9.8 billion in 2021 from $3.5 billion in the previous year, indicating higher exit activity from VC/PEs.
With $15.6 billion, IT services saw maximum exits due to several buyout deals followed by BFSI and SaaS/AI sectors at $5 billion each. Energy ($2.8 billion,) healthcare and life sciences ($2.5 billion), and e-commerce and listing platforms ($2.5 billion) were ranked among the top 5 sectors for PE/VC exits.
The exit of Partners Group and Canada Pension Plain Investment Board (CPPIB) in the $9.6 billion acquisition of digital engineering services firm GlobalLogic by Japanese conglomerate Hitachi tops the exit charts. The two investments firms together gained multibagger exits from the deal, which is one of the largest acquisitions in the product engineering services spaces.
Software firm Hexaware Technologies’ $3 billion deal with Carlyle Group and BillDesk’s $4.7 billion acquisition by PayU are ranked third and fourth in the top 10 exits of the year.
Initial public offerings (IPOs) generated most exits for PE/VC investors in the start-up world. Alibaba, SoftBank, and Berkshire Hathaway were the main investors that exited over Paytm's $2.5-billion public listing while Info Edge gained significant returns in Zomato’s $1.2 billion IPO. Tata Group’s $1.2 billion acquisition of grocery delivery firm BigBasket was the only non-IPO tech deal in the list.
Public market listing of tech and Internet companies generated $6.3 billion for investors in 2021. In total, PE/VC investors recorded exits worth $11.6 billion via public markets in 2021. Out of 138 Draft Red Herring Prospectuses (DRHP), or offer documents, filed in 2021, 54 per cent were backed by VC/PE investors.
According to the report, India is now the fastest growing start-up ecosystem in the world after the USA as VC/PE investments in India have grown 80 per cent by deal value in 2021. Investors pumped in $40 billion across 816 tech and internet deals, which accounted for 53 per cent of total deal value in 2021. Number of investors grew too as 158 new domestic and international investors made PE/VC bets in India in 2021.