Despite the pandemic, India's private equity and venture capital (PE-VC) industry remained resilient. VC is arguably the most outstanding asset class this year for India, according to the IVCA-Preqin Factsheet.
As per the report, private equity represents the largest segment of Indian alternative assets with assets under management (AUM) of $31 billion, up by 2.3 percent from a year ago, whereas venture capital is the most outstanding asset class this year for India, accounting for $26 billion in aggregate deal value to date which is more than double of last year.
India absorbed $123 billion dollars in the last two years vis-a-vis $200 billion in the last five years, annually this is 1.8 percent of the country’s current GDP, the report added. Indian PE-VCs funds have had impressive exits this year, supported by buoyant capital markets. From January to August 2021, cumulative exits by PE-VC funds reached $31 billion.
India’s absorptive capacity can go up from $500 billion to $750 billion in the next 5 years, the report added.
“The exit options for investors have vastly improved over the past 5 years with a strong velocity in the PE to PE transactions, strategic exits and appetite for IPOs in the domestic and international markets,” said Renuka Ramnath, Chairperson, IVCA.
The findings showed that in 2020, private equity-backed buyouts in India totalled a record $19 billion, up 162 percent from the previous year. In the venture capital space, total deal value stands at $26 billion in 2021 to date, already more than double last year’s $11 billion.
The number of venture capital deals completed may be dropping off, but their size is increasing. India is producing an increasing number of unicorns and decacorns including technology-led accommodation provider Oravel and e-commerce giant Flipkart.
India is well on its way to receiving $30 billion worth of VC investments from domestic and global investors in 2021, the report added.