- Buyouts recorded the highest monthly deal value in October 2021 at US$6 billion across six deals
- Technology was the most active sector in October 2021 with US$3.6 billion in PE/VC investments across 30 deals
- Exits record US$5.1 billion in October 2021 with secondary exits worth US$4.9 billion
Mumbai, 16 October 2021: According to the IVCA-EY monthly PE/VC roundup, October 2021 recorded investments worth US$12.9 billion across 127 deals including 21 large deals worth US$10.9 billion. Exits recorded US$5.1 billion across 24 deals in October 2021, with five secondary exits worth US$4.9 billion.
Vivek Soni, Partner and National Leader Private Equity Services, EY said, “The PE/VC deal activity is on a roll in 2021, significantly exceeding the previous all-time highs. YTD October 2021, PE/VC investments have recorded US$65.6 billion, 38% higher than the previous annual high recorded in 2020 and exits have recorded US$38.7 billion, 43% higher than the previous calendar high recorded in 2018. October recorded US$12.9 billion in PE/VC investments over 127 deals and US$5.1 billion across 24 exits.
October 2021 recorded an all-time high value of monthly investments at US$12.9 billion, dominated by buyouts worth US$6 billion. Exits in October were dominated by secondary deals worth US$4.9 billion. Mega deals (>$1 billion) have dominated both investment and exit activity in October 2021 with three deals accounting for 46% of total value of PE/VC investments and two deals accounting for 96% of total value of exits.
Start-ups continued to garner a significant share of PE/VC investments in October 2021 at US$3.8 billion concentrated in sectors like financials services and education. While there were no PE-backed IPOs in October, the line-up for November and December is strong. With the successful listings of Nykaa and Fino Paytech there appears to be strong investor interest for VC backed, new age companies as PayTM, PolicyBazaar and others look to complete their listings.
The signalled intent of the main Central Banks to continue with their loose monetary policy has created a confluence of low discount rates and very liquid markets, which appears to have lifted all boats, and hence we are seeing a strong momentum not only in PE/VC investments but also in PE/ VC backed exits as well as widespread inflation in all kinds of assets. While several experts believe that this one-way street can’t continue for much longer and that the markets are looking for an excuse to correct, for now the momentum appears to be strong.
Although India appears to be in a good spot geopolitically as well as from a macroeconomic point of view, downside risks like the strengthening US Dollar, hardening crude oil prices and any faster than anticipated tightening of monetary policy by the US Fed in response to record US inflation remain on the radar.”
PE/VC investments in October 2021 recorded the highest ever monthly value at US$12.9 billion on the back of large buyouts. PE/VC investments in October 2021 were 71% higher than October 2020 (US$7.5 billion) and 2.5 times the value recorded in September 2021 (US$5.2 billion). October 2021 recorded 127 deals, 28% higher than October 2020 (92 deals) and 5% lower compared to September 2021 (134 deals).
The deal intensity in 2021 has been very strong and has been accelerating month-on-month and as a result, the cumulative PE/VC investments of US$65.6 billion recorded in the first ten months of 2021 have already surpassed the previous annual high of US$47.6 billion seen in 2020 by 38%.
Pure play PE/VC investments (i.e., excluding investments in real estate and infrastructure) too recorded highest ever monthly value at US$12.1 billion, almost 2.5 times the value recorded in October 2020 (US$4.8 billion) and September 2021 (US$4.7 billion) and accounted for 94% of all PE/VC investments in October 2021.
October 2021 recorded 21 large deals (deals of value greater than US$100 million) aggregating US$10.9 billion compared to nine large deals worth US$6.7 billion in October 2020 and 11 large deals worth US$3 billion in September 2021. The largest deals in October 2021 include the US$3 billion buyout of Hexaware Technologies Limited by Carlyle, followed by Blackstone’s buyout of VFS Global Services Private Limited for US$1.9 billion.
By deal type, buyouts were the highest in terms of value in October 2021 at US$6 billion across six deals, twice the value recorded in October 2020 (US$2.8 billion) and 58% higher compared to September 2021 (US$3.8 billion).
Next in line were start-up investments at US$3.8 billion across 97 deals, more than six times the value recorded last year (US$547 million) and second highest ever monthly value of start-up investments. October 2021 was the 4th consecutive month for monthly start-up investments being greater than $3 billion.
Growth investments recorded US$1.7 billion across 13 deals followed by PIPE investments worth US$1.3 billion across five deals.
From a sector point of view, technology was the top sector in October 2021 with US$3.6 billion in PE/VC investments across 30 deals. The second largest sector was business and professional services with US$2.4 billion recorded across five deals, largely on account of the Blackstone-VFS Global transaction.
Spotlight: Trends in secondary exits
PE/VC exits have recorded an all-time high of US$38.7 billion within the first ten months of 2021 with secondary exits accounting for 33% of all exits by value and 23% by volume. October alone has accounted for US$4.9 billion in secondary exits across five deals. Secondary exits in 2021 have been the highest ever both in terms of value and volume recording US$12.9 billion cross 52 deals which is more than the total value of secondary exits in the previous five years combined.
In terms of value, technology sector has accounted for 37% (US$11 billion) of all secondary exits by value since 2011 primarily due to few large deals in 2021 totalling US$6.3 billion. Next in line was financial services with US3.7 billion and e-commerce with US$2.3 billion.
In terms of number of deals, financial services recorded maximum deals (57 deals) followed by healthcare (37 deals) and technology (32 deals).
Westbridge has been involved in maximum secondary deals (13 deals) followed by Temasek (12 deals), Blackstone (12 deals), Sequoia (11 deals), Warburg (10 deals) and KKR (9 deals).
With high global liquidity and low interest rates lifting valuations across public and private markets alike, many PE/VC funds sitting on older vintage investments are using this opportunity to exit long held positions at reasonably good valuations.
Further, with many companies choosing the IPO route to raise funding, large PE investors are actively looking for secondary deals especially in situations where financial sponsors hold majority control and where an IPO, though lucrative, is not a viable option for a complete exit given the size of their holding.
This has created a win-win situation for both buyers and sellers. The buyer gets to deploy large sums of capital in a single transaction as many global funds look to significantly increase their India allocations. Similarly, sellers get to return capital + returns to their LP’s, thereby laying the foundation for bigger rounds of future fundraising.
October 2021 recorded 24 exits worth US$5.1 billion compared to US$288 million recorded in October 2020 and US$2.5 billion recorded in September 2021. Cumulative exits in 2021 till date have recorded US$38.7 billion, 43% higher compared to the previous high of US$27 billion recorded in 2018.
Exits via secondary sale were the highest in terms of value in October 2021 at US$4.9 billion across five deals, accounting for 96% of total value of all exits. This was on account of two large deals: 1) Carlyle’s buyout of Hexaware from Baring Asia PE for US$3 billion and 2) Blackstone’s buyout of 75% stake in VFS Global Services for US$1.9 billion from EQT Partners. These were also among the largest ever secondary exits that the Indian PE/VC eco-system has seen.
October 2021 recorded total fundraises of US$70 million compared to US$1.5 billion raised in October 2020 and US$740 million raised in September 2021.
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The Indian Private Equity & Venture Capital Association (IVCA), is the apex body promoting the Alternative Investment Funds (AIFs) in India and promotes stable, long-term capital flow (Private Equity (PE), Venture Capital (VC) and Angel Capital) in India.
With leading VC/ PE firms, institutional investors, banks, corporate advisers, accountants, lawyers and other service providers as members, it serves as a powerful platform for all stakeholders to interact with each other. Being the face of the Industry, it helps establish high standards of governance, ethics, business conduct and professional competence. With a prime motive to support the ecosystem, it facilitates contact with policy makers, research institutions, universities, trade associations and other relevant organizations. Thus, support entrepreneurial activity, innovation and job creation.