Exits worth $4 billion were recorded in the first quarter of this calendar year, 16% lower than Q1 2021, which logged $4.8 billion worth of deals, said IVCA-EY report on Wednesday.
The quarter recorded 53 exit deals worth $4 billion, compared to 62 deals worth $4.8 billion in 2021.
Exits via secondary sale were the highest with $2 billion recorded across nine deals, accounting for 50% of all exits by value in the quarter.
This was followed by 11 exits worth $1.9 billion via open market sales.
Strategic exits were the highest in terms of numbers in the quarter with 32 deals. However, the values were undisclosed on most deals.
Q1 2022 had just one private equity-backed IPO (initial public offering) compared to 10 in Q1 2021.
The largest exits in the quarter include CPPIB selling its 2% stake in Kotak Mahindra Bank for $893 million. This was followed by the $800 million exit from IGT solutions by AION.
The financial services sector dominated the value of exits with 11 deals worth $1.5 billion followed by the technology sector with $1.1 billion worth 12 deals.
“PE/VC exits recorded the lowest value in the past five quarters at $4 billion in the absence of large strategic and secondary deals. Moreover, a drought in PE-backed IPOs has further dampened the value of PE/VC exits.
Nonetheless, the past three months have recorded a rising trend in the number of exits despite the absence of PE-backed IPOs. Also, Q1 22 had many strategic exits where the deal values were not disclosed, thereby suppressing the reported aggregate exit value,” said Vivek Soni, Partner and National Leader Private Equity Services, EY.
The quarter saw fundraise up to $4.6 billion against $1.7 raised in Q1 2021. The largest India dedicated fund outlay in the quarter saw Japan-based Mitsubishi UFJ Financial Group’s banking subsidiary MUFG Bank announcing an allocation of $300 million to its fund named ‘Ganesha’ for investments in Indian startups.
PE/VC investments in the quarter were 54% higher than in Q1 2021.
In terms of the number of deals, the first quarter of this calender year recorded an increase of over 30% compared to Q1 2021.
The increase in PE/VC investments has been driven by a significant growth in startup bets which stood at $7.7 billion, having recorded a 170% increase in value as compared to Q1 21 where $2.8 billion was invested, accounting for more than 50% of all PE/VC investments in Q1 22.
Startup investments were the largest in Q1 22, with $7.7 billion invested across 255 deals, compared to $2.8 billion invested across 175 deals in Q1 21, the third-highest quarterly value of startup investments and accounting for more than half of total PE/VC investments.
In terms of volume, startup investments accounted for 71% of all deals in the third quarter.
PE/VC investments in the education business have expanded considerably during the previous three years.
Since 2010, education-related PE/VC investments have accounted for more than 70% of all PE/VC investments in the sector.
The sector is now undergoing consolidation, with some of the larger competitors pursuing acquisitions.
Since 2015, the sector has seen 43 acquisitions for $3 billion, with 15 agreements worth $2.4 billion occurring in 2021, largely due to BYJU acquisitions.
BYJU's was responsible for 15 of the 43 trades so far, while Unacademy was responsible for seven.
The BYJU's-Aakash deal was the largest in the business, at $1 billion, the report stated.
