PE and VC investments halve in September 2021

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Investments by private equity (PE) and venture capital (VC) funds have reduced to USD 4.8 billion against USD 10.9 billion in August 2021 but are more than the USD 4.3 billion reported on a year-on-year basis. Sequentially the investments in the September quarter amounted to USD 25.3 billion by a sharp recovery in start-up investments.

Private Equity firms invest in companies that are not publicly listed whereas Venture Capital is funding provided to start-ups that have high growth potential. Private equity and venture capital firms invest in different types of businesses, invest different amounts, and claim equity stakes accordingly. They exit by selling their stakes in equity financing like during an Initial public offering (IPO).

The estimated 2021 PE and VC investments and exits could be around USD 70 billion and USD 50 billion, respectively.

There were approximately 600 transactions worth USD 30 billion in July-September 2021 quarter, with IPOs (Initial Public offering) leading the number at USD 5 billion.

Increasing deal activity during the pandemic was supported by digital adoption and transformation and greater resilience in 2021 after the disastrous pandemic. The year has seen growth in every quarter, and this trend will persist in the upcoming quarters.

The pure-play private equity and venture capital investments i.e., excluding the investments in the real estate and infrastructure sector, reported the highest quarterly growth amounting to USB 23 billion as compared to USD 9.7 billion on a year-on-year basis and increased 63% on quarterly (June quarter) basis totalling to USD 14.1 billion.

The private investments in public equity stood at USD 1.3 billion during the July-September 2021 quarter as compared to USD 1.8 billion on a year-on-year basis and USD 619 million in the April-June quarter of 2021.

The September 2021 quarter reported exits of USD 11.3 billion which is 35 percent lower than the June quarter of 2021. Private equity and Venture capital investments have reported an all-time high of USD 33.4 billion during the first nine months of 2021 which was majorly by large strategic exits.

The July-September 2021 quarter recorded USD 3.4 billion in fundraises as against USD 2.8 million raised in the same quarter of 2020 and USD 1 billion were raised in June quarter 2021.

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