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Aided by buoyant capital markets, Indian Private Equity/Venture Capital (PEVC) funds have had impressive exits this year, reporting record cumulative exits of $31 billion between January-August this year. This compares with the previous high of $27 billion reported for the entire calendar year 2018.
Not only this, with a dozen PEVC funded companies already having filed for IPOs and likely to hit the market in Q42021 (October-December), new records on exits are likely to be scripted, going by the first- ever factsheet on the Indian private equity and venture capital (PEVC) industry.
This factsheet — produced jointly by Preqin and the Indian Private Equity and Venture Capital Association (IVCA) — provides a comprehensive snapshot of India’s PEVC industry and offers insights from industry experts.
Renuka Ramnath, Chairperson of IVCA, said the exit options for investors have vastly improved over the past five years with a strong velocity in PE-to-PE transactions, strategic exits and appetite for IPOs in the domestic and international markets.
She also said the Preqin-IVCA factsheet presents a growth-oriented scenario that lays down the fact that India is most certainly a favourable investment destination for global institutional investors and Indian limited partners.
Ee Fai Kam, who heads Asian operations of Preqin and also its Head of Research, said that India will figure prominently on investors’ radar for the next 12 months and a strong deal flow is expected driven by venture capital. India is well on its way to receiving $30 billion of VC investments from global and domestic investors in 2021.
“This year, emerging markets have been the darling, attracting lot of capital from Limited Partners everywhere. Emerging markets fund raising has exceeded 2020 levels and is same whether it is India, South East Asia, Latin America or BRICS. Emerging markets are gaining traction. On the other hand, developed markets are playing catch up,”Kam said.
Pandemic pain
On fundraising, he said that the pandemic caused a slowdown worldwide. However, 2021 has seen strong recovery — $3.4 billion has been raised so far, the highest on record.
Preqin, a global leader in alternative assets data, tools and insights, had recently entered into a partnership with IVCA to produce performance-based benchmarks for Alternative Investment Funds as an official benchmarking agency.
India’s AIF industry has grown quickly from $35.5 billion in end 2016 to $60.5 billion by December 2020 – an increase of more than 70 per cent in total commitments for SEBI registered funds alone.
On India gaining from the recent persistent regulatory action by Chinese Government and its authorities, Kam said that India can absorb some of the outflows from China but not in its entirety. Sectors where Chinese companies predominantly serve external markets such as textile, manufacturing, car, computers manufacturing, electronic components — these are easier to pivot to India. However, in sectors such as healthcare and telecom, it is far harder for capital to flow to India, he added.
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