Private equity (PE) and venture capital (VC) firms had invested in 117 deals worth $5.8 billion, a 33% year-on-year (YoY) jump from February 2021, which recorded 88 deals worth $3 billion, according to a report by the Indian Venture and Alternate Capital Association (IVCA) and consultancy firm EY.
In February 2022, ten exits totaling $1.4 billion were recorded, compared to $2.4 billion over 27 exits in February 2021 and $289 million across 14 exits in January 2022.
Secondary exits were the highest in February 2022, totalling $1.2 billion across three deals, compared to $414 million in four deals during February 2021, owing to AION's $800 million exit from IGT Solutions.
Strategic exits had the most deals in terms of numbers, with five, however, the deal amounts for four of them were not disclosed.
Baring PE Asia bought IGT Solutions Private Limited from AION for nearly $800 million in February 2022, which was the largest deal in PE.
Over the last 5-6 years, private equity and venture capital investments in fintech have been on the rise.
Since 2016, fintech investments have grown at a CAGR (compound annual growth rate) of 125%.
The latest spike in PE/VC investments — $9.2 billion in 2021 and the first two months of 2022 is greater than the sector's combined total investments in the preceding five years (2016-2020).
As a result, the share of PE/VC investments in fintech across the financial services sector has surged from 5% in 2016 to 66% in 2021, and as high as 90% in the first two months of 2022.
“As the volatility in the mid-cap and small-cap indices continued in February 2022, there was only one PE-backed IPO and we expect the number of PE-backed IPOs to be lower in 2022 given the volatility in the capital markets, rise in uncertainty and waning investor interest in the primary markets,” said Vivek Soni, Partner and National Leader Private Equity Services at EY.
Following the Covid outbreak, PE and VC investments in fintech have outpaced investments in traditional financial services areas such as lending, insurance, and so on.
Payments, insurance and lending have been the most popular fintech segments in terms of PE/ VC investment value, with payments receiving 48% of all PE/ VC fintech investments since 2016, the report said.
In terms of sector, technology topped again in February 2022, with $1.5 billion in PE/VC investments spread across 19 deals against $48 million in four deals last year, boosted by Baring PE Asia's IGT Solutions takeover.
Financial services came in second with $1.2 billion in 26 deals $245 million in 13 deals in February 2021, fueled by investments in fintech, which saw four significant deals of over $100 million, with the highest investment of $450 million going to the crypto platform Polygon.
Logistics space saw $723 million invested across six deals was the third largest, with major investments in the logistics space which is an emerging area for PE/ VC investments.
Four different PE and VC funds raised a total of $347 million across four funds against $380 million raised in February 2021 by one fund. Trifecta raised $199 million to invest in IPO ready new-age businesses.
