PE-VC investments grow 33% in the first six months of 2021


Investments by private equity and venture capital funds doubled to a record high of USD 9.5 billion in July mainly driven by higher investor interest in the e-commerce sector. Private equity (PE) and venture capital (VC) investments stood at USD 4.1 billion in the year-ago period. The activity was higher by 77 per cent when compared to June’s USD 5.4 billion, the report on monthly PE/VC investment activity by industry lobby IVCA and consultancy firm EY said.  The month recorded 19 large deals of over USD 100 million aggregating to USD 8.2 billion, compared to 10 large deals worth USD 3.1 billion in the year-ago period and 12 worth USD 3.6 billion in June 2021. July 2021 was also a record in volume terms, as 131 transactions were announced, compared to 77 in the same month last year and 110 in June 2021.

Indian businesses have raised about $4.1 billion of capital in June 2021 across 121 deals. Sequoia Capital, Tiger Global, Accel, Blume and Elevation Capital were the top investors, with the most number of deals in the same month. A major chunk of the total PE investments flew into IT & & ITeS and healthcare, benefiting from increased digital adoption and growth opportunities in these sectors during the pandemic. The half-year period (H1-2021) also saw the creation of 16 unicorns compared to just three in H1-2020. 

BYJU’s, which became the highest valued edtech startup in the world in 2019, has now donned the hat of the most valued Indian startup, surpassing digital payments giant Paytm by raising $350 million last month from UBS Group, Zoom founder Eric Yuan, Blackstone, Abu Dhabi sovereign fund ADQ and Phoenix Rising–Beacon Holdings, at a valuation of $16.5 billion. E-pharmacy unicorn PharmEasy also raised about $300 million from its existing investors last month, to aid the acquisition of public-listed diagnostic chain Thyrocare for ₹4,546 crores ($612 million). TPG, Singapore’s Temasek, Facebook co-founder Eduardo Saverin’s B Capital, Prosus and Think Investments participated in this round. 

While most industries are struggling, as per IBEF, the IT industry’s revenue was estimated at around US$ 191 billion in FY20, growing at a 7.7 per cent year-on-year basis. It is expected to reach US$ 350 billion by 2025. The domestic revenue of the IT industry was estimated at US$ 44 billion, and export revenue was estimated at US$ 147 billion in FY20. The increased consumption of software such as Google Meet, Zoom, and Microsoft Teams adopted not only by working parents but also by children as schools are is one of the reasons. Governments across the world, including India, are preponing the rollout of 5G technology which will give impetus to telemedicine in India. 5G will also provide a fillip for Smart Cities across the country. IT is and will remain the most significant enabler in the country’s growth and development. 

Fintech, enterprise tech and edtech startups will continue to attract mega funding rounds in the second half of the calendar year 2021, along with health tech, e-commerce and media and entertainment as these sectors have a substantial number of growth-stage startups that are looking for transitional capital to enter the late stage. Hence, the investment rates of venture capitalists are less likely to decline even in a pandemic considering the increase in upcoming startups and trends.

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