Private Equity-Venture Capital (PE-VC) firms invested a record $63 billion (across 1,202 deals) in Indian companies during 2021, registering a 57 per cent rise over the $39.9 billion (across 913 deals) invested in the previous year, says a report by the Chennai-based Venture Intelligence, a research service focused on private company financials, transactions, and their valuations. The data includes venture capital type investments, but excludes PE investments in real estate.

India minted a total of 44 Unicorn companies (VC-funded start-ups valued at $1 billion or more) in 2021, of which 15 were in the fourth quarter. The $23.4-billion invested in the IT sector dominated the list of Unicorns and accounted for more than 37 per cent of the overall value of PE-VC investments in 2021. The fourth quarter saw over $5 billion (across 25 deals) being invested in such companies.

The year 2021 witnessed eight investments worth $1 billion or more, led by Flipkart's $3.6-billion pre-IPO round (which marked the re-entry of SoftBank Corp to the e-commerce giant's list of shareholders, following its exit to Walmart in 2018), the report said.

The next three largest PE investments - after Flipkart's mega fund raise - went to IT Services companies: Carlyle Group's acquisition of Baring Private Equity Asia's (BPEA) stake in Hexaware Technologies in a $3-billion deal; the $2.8-billion bid by Blackstone to buy out a 75 per cent stake in publicly listed MphasiS; and Advent International's acquisition of Encora (from fellow US-headquartered PE firm Warburg Pincus) for $1.5 billion. Edtech "decacorn" Byju's $1.4-billion fundraise led by Prosus Ventures (formerly Naspers), was the fifth largest PE-VC investment during 2021.

VC investments in 2021 - at $34.7 billion across 1,070 deals - rose by over 200 per cent compared to 2020 ($11.4 billion across 795 deals). 2021 witnessed 97 mega deals ($100M+ rounds) worth $24 billion, compared to just 28 such investments worth $5.5 billion in 2020. VC is Seed to Series F investments in companies less than 10 years old and late-stage tech investments).

E-Commerce was the favourite sector among investors in 2021, attracting $10.3 billion, followed by fintech which attracted $7.7 billion.

Sequoia Capital India was the most active investor in 2021, crossing a century in terms of bets (105 transactions across 91 companies), followed by global investor Tiger Global (which was part of one out of every three $100M+ deals during the year) with 60 investments (across 47 companies), the report said.

Accounting for five of the eight billion-dollar deals - led by the Flipkart investment and the string of mega-sized IT Services bets - IT & ITeS companies attracted $40.7 billion during 2021. The tech industry witnessed 85 mega deals ($100M+ investments) during 2021 totalling $31.8 billion, of which 26 deals (aggregating to $9.8 billion) were announced during Q4'21.

The BFSI and healthcare and life science industry were the next two major sectors attracting investment.

"While the mega-sized investments and the Unicorn rush hogged the headlines, a key highlight for the Indian PE-VC industry during 2021 was the successful IPOs of several investee companies, including Zomato, Nykaa and PolicyBazaar, on the domestic bourses," noted Arun Natarajan, Founder of Venture Intelligence, which provides data and analysis on Private Company Financials, Transactions (private equity, venture capital, and M&A) & their Valuations in India.

"The IPOs, along with a string of successful Liquidity Events via Secondary deals and Strategic M&A - led by the $2.2 billion exit from payments firm BillDesk - will help establish the Indian PE-VC asset class on a firm footing on the global stage," he added.

Top Private Equity Investments (2021)

Source: Venture Intelligence

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