India-based Private Equity (PE) funds raised a whopping $ 4.4 billion in January-March 2022, more than double the amount of $ 1.61 billion raised in same quarter last year, showed a PE snapshot report by Refinitiv, a LSEG business.

This latest quarterly fund raise — highest since January -March quarter of 2017 from which data is available — was also significantly higher than the $ 1.23 billion raised in Oct-Dec 2021, the report showed. 

However, the number of companies invested for the quarter under review have seen a sharp decline to 28 companies, down 73.1 per cent over 104 companies in same quarter last year. The latest reading is down 60.6 per cent from 71 companies invested in fourth quarter of calendar year 2021.

Elaine Tan, Senior Analyst at Refinitiv, said there is substantial capital waiting to be deployed as India-based PE funds raised $4.4 billion so far this year, more than double the amount raised from the first quarter of last year, pushing fundraising activity to more than $21 billion from 2019 to first quarter of this year.

PE flows

Private equity investments in India have started strong this calendar year and totaled $8 billion during the first quarter of 2022, a 88.6 per cent increase over $ 4.3 billion from the same period last year and saw growth in number of deals and number of companies receiving investment injections. 

The momentum was driven by several significant factors including historically low interest rate environment, digital acceleration and transformation, and increasing depth in start-up ecosystem, Tan said.

 Last year, the buoyant secondary markets and record primary listings in India have driven confidence in the IPO markets, providing a conducive environment for companies to go public and provide a positive element for start-ups and investors to consider IPO as a viable exit strategy. However, tightened scrutiny on Indian IPOs and market volatility brought by international conflicts may indicate headwinds for IPOs during the rest of the year, Tan added. 

On a quarter-on-quarter basis, private equity investments decreased 30.7 per cent to $ 8.03 billion in January-March 2022 from $ 11.60 billion in previous quarter. The first quarter this calendar year also saw a decrease in number of PE deals to 387 from 410 in the fourth quarter of calendar year 2021. In first quarter of calendar year 2021, the number of PE deals stood at 286.

PEs attracted to internet  

Internet Specific businesses continue to attract maximum PE interest in Q1 2022 and has witnessed growth as compared to Q1 2021 with the total sum equity invested of $ 3.6 billion in Q1 2022 as compared to $ 1.59 billion in same quarter last year.

Internet Specific and Computer Software have seen most of the investments coming in for Q1 2022. Internet specific sector have increased along with the number of deals from 107 (Q1 2021)  to 118 (Q1 2022). Computer Software ($ 2,392.7 million), Transportation ($817.5 million) and Consumer Related ($ 497.1 million) have witnessed an increase in the sum invested as compared to Q1 2021. Sectors like financial services ($205.8 million), medical/health ($42.3 million), biotechnology ($6 million) have witnessed a decline in Q1 2022 as compared to Q1 2021, according to Refinitiv.