Venture Capital Best Rated Asset Class for India in 2021: Report


Despite the pandemic, India’s private equity and venture capital (PE-VC) industry has remained resilient. VC is arguably the most notable asset class this year for India, according to the IVCA-Preqin fact sheet.

Private equity represents India’s largest alternative asset segment with assets under management (AUM) of $ 31 billion, up 2.3% from a year ago, according to the report. Venture capital is India’s most notable asset class this year, accounting for $ 26 billion in total deal value to date, more than double last year.

India has absorbed $ 123 billion in the past two years compared to $ 200 billion in the past five years, which represents 1.8% of the country’s current GDP each year, the report adds. Indian PE-VC funds have experienced impressive outflows this year, supported by buoyant capital markets. From January to August 2021, the cumulative outflows of PE-VC funds reached $ 31 billion.

India’s absorptive capacity may increase from $ 500 billion to $ 750 billion over the next 5 years, the report adds.

“Exit options for investors have improved dramatically over the past 5 years with high speed in PE to PE transactions, strategic exits and an appetite for IPOs in domestic and international markets,” said Renuka Ramnath, President of IVCA.

The results showed that in 2020, private equity-backed buyouts in India totaled a record $ 19 billion, up 162% from the previous year. In venture capital, the total deal value stands at $ 26 billion in 2021 to date, already more than double the $ 11 billion last year.

The number of venture capital deals concluded may be declining, but their size is increasing. India is producing a growing number of unicorns and decacorns, including tech hosting provider Oravel and e-commerce giant Flipkart.

India is on track to receive $ 30 billion in venture capital investments from domestic and global investors in 2021, the report adds.

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