PE/VC investment and exit deals reach record highs: IVCA-EY report

By Anuj Suvarna

  • 14 Oct 2021
Credit: 123RF.com

Investment and exit deals to date have reached record highs of $52.3 billion and $33.4 billion in 2021, respectively, an IVCA-EY report said on Thursday.   

PE/VC investments in Q3 2021 stood at $25.4 billion, 2.4 times higher than $10.6 billion of Q3 2020. In terms of the number of deals, Q3 2021 recorded an increase of over 65% compared to Q3 2020 and Q2 2021. Q3 2021 recorded 407 deals versus 244 deals in Q3 2020 and 247 deals in Q2 2021.   

This year’s deal activity is dominated by pure-play PE/VC investments accounting for 86% of all PE/VC investments in 2021 and 91% in Q3 2021. 

The e-commerce sector topped for investments, displacing financial services which held this spot for many years, with $7.5 billion invested in Q3 2021 ($12.2 billion this year), 28% of all deals by value.  

The increase in PE/VC investments in Q3 2021 has been driven by significant growth in startup investments and a return of buyout activity, all underpinned by an increase in global liquidity and an emerging sanguine view by investors on India’s growth prospects.  

The quarter also recorded significant growth in value and number of deals larger than $100 million, accounting for 77% of all deals by value. Q3 2021 recorded 49 large deals aggregating to $19.4 billion compared to 25 large deals of $8.1 billion in Q3 2020 and 37 large deals of $12.7 billion in Q2 2021.   

Growth deals were next in line with $6.9 billion invested across 46 deals, followed by buyouts worth $6.4 billion across 23 deals.  

The largest deal in Q3 2021 saw a group of investors including Softbank, Tiger Global, CPPIB and others invest $3.6 billion in Flipkart.  

Buyouts, which were the most affected deal strategy post the onset of the COVID-19 pandemic, have witnessed a sharp rebound recording $14.3 billion across 51 deals in the first three quarters of 2021 versus $2.9 billion recorded across 22 deals during the same period last year.  

Q3 2021 recorded the highest ever number of exits in a quarter with 88 exits, more than twice the number of exits in Q3 2020 with 41 exits, 54% higher than the number of exits in Q2 2021 with 57 exits.  

Q3 2021 recorded exits worth $11.3 billion, 15 times the value recorded in Q3 2020 which stood at $728 million and 35% lower compared to Q2 2021 at $17.5 billion.  

Exits via sale to strategics were the highest at $4 billion recorded across 32 deals, accounting for 35% of all exits by value in Q3 2021 followed by 15 exits via a secondary sale (sale to other PE funds) worth $3.4 billion.   

Q3 2021 also recorded 13 PE-backed IPOs, the highest number of PE-backed IPOs in any quarter, that saw PE funds garner $1.3 billion in sale proceeds, highest ever quarterly, taking the annual tally of PE-backed IPOs to 25 which is the highest ever with a record value of $2.6 billion amassed by PE funds in the OFS component of these IPOs.  

Open market exits too recorded the highest ever quarterly value with $2.6 billion recorded across 28 exits.  

One of the largest exits of the year saw General Atlantic, TA Associates, Temasek, and other early investors sell their stakes worth around $2.9 billion in Billdesk to Prosus.    

The year also recorded the first SPAC listing by an Indian company wherein ReNew Power was listed on the NASDAQ via a merger with RMG Acquisition Corp II.    

From a sector perspective, financial services recorded the highest value of exits in Q3 2021 worth $5.4 billion across 18 deals, the highest ever quarterly value and accounting for 48% of the total value of exits in Q3 2021 followed by the technology sector at $1 billion across 17 deals and e-commerce sector with $893 million across 5 deals.  

Sequoia Capital India had the highest number of portfolio companies that went for an IPO which include Indigo Paints, Stove Craft, Craftsman Automation, and Zomato; followed by Temasek with three IPOs and Warburg and IFC which had two each.