Report

India Private Equity Report 2021

Despite the pandemic, India’s Private Equity industry sustained its momentum.

By Arpan Sheth, Sriwatsan Krishnan, Aditya Shukla, and Prabhav Kashyap Addepalli

First published on junho 09, 2021
min read


2020 was a momentous year, with Covid-19 upending some forecasts and trends whilst reinforcing and accelerating others. The economic impact of the coronavirus pandemic in India has been significant, causing GDP contraction of more than 10% and leading to the highest-ever annual fiscal deficit at 9.5% for fiscal year 2021. Imposition of a nationwide lockdown in late March 2020 halted over 65% of the Indian economy and led to the loss of more than 4 million jobs in the formal sector. Written in collaboration with IVCA IVCA is the oldest and most influential PE/VC Industry body in India, with the sole focus to promote the AIF asset class within India and overseas. IVCA's mission is to promote a healthy environment for the growth of private equity and venture capital, which is needed to support economic growth, good governance, entrepreneurship, innovation and job creation in India. IVCA stands for the values of good governance, environment protection and poverty reduction through growth of the private sector. It helps establish high standards of governance, ethics, business conduct and professional competence. We reach out to the far-flung areas of India and also stand ready to assist on a global scale to contribute significantly. IVCA is a nonprofit organization powered by its members. The members are influential firms from around the world, including private equity and venture capital funds, corporate advisors, lawyers and institutional advisors. However, things have turned a corner in 2021, with unprecedented stock market gains on the back of sooner-than-expected business recovery, strong foreign institutional investor (FII) inflows, and Covid-19 vaccine approval and administration. The latest forecasts by the IMF expect strong rebound in 2021, with growth returning to the long-term trend of 7%–8% from 2022 to 2025. Despite Covid-19, we have seen a few investment themes continue from prior years. Strong deal volume flow continued with a 5% year-over-year (YOY) increase despite a slowdown in the total value of investments (excluding Jio Platforms and Reliance Retail deals). Growth equity momentum was sustained with $10 billion in investments, more than in all previous years and nearly at par with 2019. From a sector standpoint, strong momentum continued in consumer tech and IT/IT-enabled services (ITES). Additionally, India-focused dry powder remained resilient at $8 billion, with the share of oversubscribed and at-target funds increasing further. At the same time, new themes emerged in 2020. There was a moderation in cheque sizes as average deal size declined by 25% compared with 2019. In terms of sector activity, healthcare witnessed a surge with big-ticket deals in pharmaceuticals manufacturing and distribution and active pharmaceutical ingredient (API) development. However, banking, financial services, and insurance (BFSI) investment value fell by 60% due to uncertainty over nonperforming assets (NPAs), the Reserve Bank of India (RBI)-imposed bank moratorium, and the impact of Covid-19 on lending. From an exit perspective, multiples rose by 1.4 times even as exit value dipped by 30% in 2020 vs. 2019. In 2020, the Indian Private Equity (PE) Landscape witnessed strong investment momentum with $62 billion in deal value and 40% from Jio Platforms and Reliance Retail deals. Investment activity was muted from March to May due to Covid-19-led uncertainty, but it recovered strongly in H2 to pre–Covid-19 levels with late-stage and buyout deals witnessing increased traction. The pandemic also led to a shift in the type of deals made, with investors focusing on alternate investment strategies such as distressed opportunistic sales and qualified institutional placements (QIPs). DOWNLOAD THE REPORT (PDF)

2020 was a momentous year, with Covid-19 upending some forecasts and trends whilst reinforcing and accelerating others. The economic impact of the coronavirus pandemic in India has been significant, causing GDP contraction of more than 10% and leading to the highest-ever annual fiscal deficit at 9.5% for fiscal year 2021. Imposition of a nationwide lockdown in late March 2020 halted over 65% of the Indian economy and led to the loss of more than 4 million jobs in the formal sector.

Written in collaboration with IVCA

IVCA is the oldest and most influential PE/VC Industry body in India, with the sole focus to promote the AIF asset class within India and overseas. IVCA's mission is to promote a healthy environment for the growth of private equity and venture capital, which is needed to support economic growth, good governance, entrepreneurship, innovation and job creation in India.

IVCA stands for the values of good governance, environment protection and poverty reduction through growth of the private sector. It helps establish high standards of governance, ethics, business conduct and professional competence. We reach out to the far-flung areas of India and also stand ready to assist on a global scale to contribute significantly.

IVCA is a nonprofit organization powered by its members. The members are influential firms from around the world, including private equity and venture capital funds, corporate advisors, lawyers and institutional advisors.

However, things have turned a corner in 2021, with unprecedented stock market gains on the back of sooner-than-expected business recovery, strong foreign institutional investor (FII) inflows, and Covid-19 vaccine approval and administration. The latest forecasts by the IMF expect strong rebound in 2021, with growth returning to the long-term trend of 7%–8% from 2022 to 2025.

Despite Covid-19, we have seen a few investment themes continue from prior years. Strong deal volume flow continued with a 5% year-over-year (YOY) increase despite a slowdown in the total value of investments (excluding Jio Platforms and Reliance Retail deals). Growth equity momentum was sustained with $10 billion in investments, more than in all previous years and nearly at par with 2019. From a sector standpoint, strong momentum continued in consumer tech and IT/IT-enabled services (ITES). Additionally, India-focused dry powder remained resilient at $8 billion, with the share of oversubscribed and at-target funds increasing further.

At the same time, new themes emerged in 2020. There was a moderation in cheque sizes as average deal size declined by 25% compared with 2019. In terms of sector activity, healthcare witnessed a surge with big-ticket deals in pharmaceuticals manufacturing and distribution and active pharmaceutical ingredient (API) development. However, banking, financial services, and insurance (BFSI) investment value fell by 60% due to uncertainty over nonperforming assets (NPAs), the Reserve Bank of India (RBI)-imposed bank moratorium, and the impact of Covid-19 on lending. From an exit perspective, multiples rose by 1.4 times even as exit value dipped by 30% in 2020 vs. 2019.

In 2020, the Indian Private Equity (PE) Landscape witnessed strong investment momentum with $62 billion in deal value and 40% from Jio Platforms and Reliance Retail deals. Investment activity was muted from March to May due to Covid-19-led uncertainty, but it recovered strongly in H2 to pre–Covid-19 levels with late-stage and buyout deals witnessing increased traction. The pandemic also led to a shift in the type of deals made, with investors focusing on alternate investment strategies such as distressed opportunistic sales and qualified institutional placements (QIPs).

DOWNLOAD THE REPORT (PDF)