PE/VC Agenda

India Trend Book 2022

 Contents

Foreword ................................................................................................3

Preface and outlook ................................................................................ 4

A brief review of 2021 ............................................................................ 9

Key trends of 2021 ...............................................................................13

Analysis of sectoral performance – 2021 ............................................... 33

Exits – at an all-time high ......................................................................55

Trends in add-on/bolt-on deals by PE/VC investees ............................... 67

Tax and regulatory updates...................................................................73

Glossary of acronyms ...........................................................................86

Appendices...........................................................................................88
 Foreword
Renuka Ramnath
Chairperson, IVCA
Founder, Managing Director & CEO,
Multiples Alternate Asset Management Pvt. Ltd.

2021 was a record-breaking year for the Indian PE/VC in 2020. The large exits tally was driven by mega deals
industry. in exits via sale to strategics and secondary deals among
PE/VC funds.
From a smart recovery in 4Q2020, 2021 went on to
shatter all previous records of PE/VC investment and Key new exit events in 2021 were the SPAC listing by
exit activity, as the low cost of capital and easy liquidity Renew Power and the IPOs by new age start-ups on the
unleased by US and European Central Banks unshackled Indian bourses.
the ‘animal spirits’ of domestic and international
All of this was made possible by investor confidence in
investors alike.
the long-term India story, and for that, we applaud the
Total PE/VC investment activity in 2021 was at US$77.1 supportive role played by the Government of India, that
billion, a 62% increase over 2020 levels. The PE asset has consistently responded to investor concerns by way
class (excluding infrastructure and real estate) of policy measures and reform. As India moves towards
demonstrated a growth of 79%. This year’s investment its aspiration of realizing a US$5 trillion economy, the
activity was dominated by start-up investing (US$28.5 Indian PE/VC industry has an important part to play.
billion, growth of 290%) and buyouts (US$22 billion, 86% Indian PE/VC investment activity could cross the
growth over 2020). Although three sectors – technology US$100 billion threshold in a couple of years, making it
(US$16.3 billion), e-commerce (US$15.9 billion) and one of the largest PE/VC markets in the world, outside of
financial services (US$11.7 billion) accounted for 57% of US and China. This is a tremendous opportunity for our
the total PE/VC investments by value, many sectors like industry to act as an agent of change and to deliver
media and entertainment, education, pharmaceuticals, impact by judicious allocation of risk capital.
and healthcare showed significant growth. For the first
I thank all of you for your support and look forward to
time ever, 14 sectors notched up PE/VC investments
your continued participation in IVCA initiatives which is
exceeding US$1 billion.
working tirelessly to strengthen the Indian private equity
Speaking of the size and depth of the PE/VC industry in and venture capital ecosystem.
India, there are over 300 funds actively investing across
I thank the EY team for putting together this report and
5,000 companies with AUM in excess of US$150 billion.
for their detailed work.
Exit activity was even more exciting, as PE/VC exits
crossed US$43 billion, more than 7x the value recorded
 Preface and outlook

Preface
In 2021, Indian PE/VC industry ended with investments ecosystems, increase in pure-play investments, change
of over US$77.1 billion, as the frantic pace of deal in allocation between sectors as well as between sub-
making helped drive investment activity across all deal sectors within a sector, and investments in new
types, sizes, and sectors. PE/VC investments in 2021 themes/sectors like EV, media and entertainment and
were 62% higher than 2020 (154% higher than 2020 ex education.
the one-off RIL deals), principally propped up by pure
play PE/VC investments that increased by 79% y-o-y This report dwells in detail on some of the new
(200% over 2020 ex RIL deals). investment trends that emerged in 2021:

After the uncertainties during the first wave of the ► Diverging from the past trend when growth deals
pandemic, PE/VC investments were on an uptrend in and buyouts dominated PE/VC investments, start-up
4Q2020 and the deal velocity picked-up pace, in size and investments emerged as the top investment
volume, in the second half of 2021 with 3Q2021 and segment, recording US$28.5 billion and accounting
4Q2021 recording two of the best quarters for PE/VC for 37% of all PE/VC investments in 2021.
investments at US$26.1 billion and US$24.4 billion Investments in start-ups was a defining feature of
respectively. 2021 which saw India overtake UK as the third
largest ecosystem for start-ups with 2021 recording
The Indian PE/VC investment activity followed the global 44 unicorns 2.
trend which saw PE investment activity surpass the
trillion-dollar mark for the first time 1. The total value of ► India is now amongst the world's fastest-growing
global PE investments in 2021 recorded US$1.2 trillion, start-up ecosystems with over 80 unicorn start-ups
up 96% from 2020. The global economic rebound from as of 2021. The emergence of new models in
the depths of the pandemic, widely available financing fintech, consumer internet, education, enterprise
for deals, increased consumption levels, the growth in tech and media and entertainment has revitalized
vaccination rates were all factors underpinning deal funding in these sectors.
momentum throughout the year. Deal activity increased ► Unlike the previous decade which saw significant
significantly across all regions, with the Americas investments in infrastructure and real estate
recording a 125% increase in deal activity. Likewise, the sectors, pure-play PE/VC investments (investments
value of deals was up by 81% in the Europe, Middle East, in sectors excluding real estate and infrastructure)
and Africa (EMEA) regions and rose 58% in the Asia- dominated 2021, accounted for 87% of total PE/VC
Pacific region. investments by value. Pure play PE/VC investments
While 2021 saw the continuation of some of the mega recorded 79% increase y-o-y (US$66.4 billion in
trends from the past decade like the growing dominance 2021 compared to US$37.1 billion in 2020).
of mega deals, rebound in buyouts following a sharp ► While most sectors recorded increase in investments
decline in 2020, significant direct investments from with 14 sectors recording over US$1 billion in
pension funds and sovereign wealth funds, large investments, e-commerce and technology sectors
investments in financial services, e-commerce and received disproportionate share of the deal flow
technology, there were some new trends that emerged, both in terms of value and volume. Technology and
like the dominance of start-up investments and India e-commerce were the top sectors each witnessing
emerging as one of the fastest growing start-up record level of investments of US$16.3 billion and

1
https://www.ey.com/en_gl/private-equity/pulse 2
according to the Hurun Research Institute's Global Unicorn
Index

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 US$15.9 billion respectively, together accounting PE/VC market despite the large market, fast paced
for 42% of investments by value. As a result, despite growth, and opportunities for capital deployment. This
receiving highest ever (US$11.7 billion) PE/VC has changed in 2021 which recorded an all-time high of
investments in 2021, the financial services sector US$43.2 billion across 281 exits, rebounding smartly
dropped to the third place after being a leader in the from a five-year low of US$6 billion in 2020. Large
previous decade. strategic deals, record levels of secondary trades and
frantic IPO activity catapulted exits to 7x the value
► This shift was driven by a global trend which saw recorded in 2020 and 60% higher than the previous high
PE/VC funds favour investments in internet and of US$27 billion recorded in 2018.
technology enabled business that saw a steep ramp-
up in consumer adoption during the pandemic that This report covers some of the key highlights of exits in
shortened the earlier envisaged digital adoption 2021:
cycle. As a result, even traditionally favourite
sectors like financial services saw fintech platforms ► Exits via sale to strategics were the highest at
receive major share of the investments (62%). US$16.9 billion (94 deals) in 2021 as large, cash
rich corporates as well as PE/VC backed category
► As start-up and VC investments dominated 2021, leaders / platforms used the pandemic induced
new themes like edtech, electric vehicles, gaming, opportunity to consolidate market share and acquire
online streaming, and sports-based entertainment new capabilities.
recorded significant PE/VC investment flow of over
US$10 billion. Some of the traditional bulge bracket ► Secondary exits in 2021 were the highest ever both
PE funds like TPG, CVC etc. made large outlays in in terms of value and volume recording US$14.4
these emerging themes which had traditionally seen billion across 56 deals. With high global liquidity and
small ticket VC funding. low interest rates lifting valuations across public and
private markets alike, many PE/VC funds sitting on
► Larger deals continue to dominate the deal older vintage investments used this opportunity to
landscape with deals greater than US$100 million exit long held positions at reasonably good
accounting for 78% of all deals by value in 2021. valuations.
2021 recorded 182 large deals aggregating to
US$59.9 billion compared to 93 large deals ► PE-backed IPOs were at an all-time high with 44
aggregating to US$38.5 billion in 2020. IPOs raising US$13.1 billion and provided a major
liquidity event for PE/VC funds who garnered
The maturing of the Indian PE/VC market has seen PE US$5.1 billion in the offer-for-sale component of
funds emerge as quasi conglomerates building these IPOs.
businesses, PE funds now set-up investment platforms
and adopt a buy and build approach. As a result, ad-on ► A new trend amongst this year’s listings were IPOs
investments by PE portfolio companies have recorded an from new-age start-ups including Nykaa,
all-time high of over US$10 billion in 2021. Policybazaar, Paytm etc., overseas listing and listing
via the SPAC route.
The past decade was marred by a lack of large scale exits
which held back the narrative of India as an attractive

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 5
Outlook
PE/VC investments
PE/VC investments in 2022 have gotten off to a good twice that of Jan-Feb 2021 but 7.6% lesser than the
start, with Jan-Feb 2022 investments being more than previous two-month period Nov-Dec 2021.

Exhibit 1A
Investments Value US$ million Number of deals
2021 2021 2022 2021 2021 2022
Deal type (Jan-Feb) (Nov-Dec) (Jan-Feb) (Jan-Feb) (Nov-Dec) (Jan-Feb)
Growth capital 1,733 2,596 2,363 28 32 33
Start-up 1,792 5,652 5,592 118 133 172
Credit investment 158 679 448 14 17 16
PIPE 126 701 402 7 17 8
Buyout 327 1,627 1,592 3 6 10
Grand total 4,135 11,255 10,396 170 205 239

Source: EY analysis of VCCEdge data

Large scale global liquidity, low yields, relatively benign allocations and many new funds looking to enter India,
inflation and returning of normalcy across countries the India dedicated fundraise too could pick-up pace in
amidst increasing rates of vaccinations and falling 2022.
severity of subsequent COVID waves helped the global
While a short period of high interest rates is unlikely to
financial markets, both private and public, record all-
change LP/GP allocation, if rates go much higher and
time high values. The year saw global PE/VC investments
persist for a longer period there could be a rebalancing
decisively gravitate towards technology led businesses
in investors’ portfolios that can impact India allocations.
as sectors like consumertech, edtech, fintech, SaaS,
healthtech etc., received disproportionate share of The ongoing Russia-Ukraine conflict has already
investments. dampened investor sentiment who are becoming more
circumspect and are moving funds into safe-haven
Looking ahead, PE/VC market in India will enter a
investments. As a fall-out of the conflict, oil prices are at
markedly different environment with the imminent rise in
a multi-year high which does not augur well for
interest rates, rising inflationary pressures, potentially
inflationary pressures globally and for India in particular,
hawkish monetary policies with winding down of stimulus
given our high dependence on imported oil. Any further
programs. This is likely to impact the valuation multiples
escalation in the currently underway conflict could
that have been on a record high over the past year and
impact the weak global recovery and in-turn investment
may see some downward revision in some of the over-
flows into India, as 85% of the funds invested in India are
heated segments.
from global pools of capital. Also, important to watch out
The supply chain and rising inflation pressures have are the election results in some of the key states as it
already had an impact on many of the portfolio can have significant impact on the Government’s policy
companies of PE/VC funds and are expected to persist trajectory running-up to the assembly elections in 2024.
for longer than previously anticipated, thus making a
The medium to long-term outlook for India is positive and
focus on value creation more pertinent to ensure
the Indian PE/VC industry could reach US$100 billion in
favourable exit multiples amidst margin pressures. This
the next 2-3 years, potentially making it the third/fourth
along with ESG could become the key areas of focus for
largest PE/VC market globally. However, the immediate
PE/VC funds in 2022.
outlook for 2022 is a bit hazy due to the inflationary
While India dedicated fundraising was modest in 2021 at pressures and imminent tightening by central banks as
US$7.7 billion despite an all-time high fundraising well as the uncertainty caused by the ongoing
recorded globally of US$732.6 billion 3, GP and LP geopolitical conflict between Russia and Ukraine/NATO
allocations towards India are expected to increase since nations. We do need to worry about the spike in oil prices
India remains one of the only bright spots of growth and other commodities over the short term to medium-
globally with one of the fastest growing start-up term.
ecosystems. With global funds increasing India

3
https://www.privateequityinternational.com/fundraising-hit-a-
new-full-year-record-in-2021/

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PE/VC Exits
Exits have gotten off to a slow start, with Jan-Feb 2022 recording exits 69% and 59% lower than Jan-Feb 2021 and
Nov-Dec 2021 respectively.

Exhibit 1B
Exits Value US$ million Number of deals
2021 2021 2022 2021 2021 2022
Deal type (Jan-Feb) (Nov-Dec) (Jan-Feb) (Jan-Feb) (Nov-Dec) (Jan-Feb)
Strategic 1,073 43 127 23 17 15
Secondary 1,961 1,537 1,526 11 4 6
IPO 2,517 2,283 8 19 14 1
Open market 1,054 572 19 24 11 2
Buyback 430 - - 3 - -
Grand total 7,034 4,435 2,182 80 46 24

Source: EY analysis of VCCEdge data

High liquidity and low funding cost had ensured some recently listed start-ups in the initial months of
availability of many buyers, especially for high growth 2022 has dampened the sentiment for IPOs from start-
businesses. Further with capital markets having a strong ups and other companies to an extent. However, this
momentum and reaching all-time highs the environment could potentially increase secondary transactions as
was also suitable for IPOs that enabled many PE/VC many companies that had lined up to list in 2022 may
funds to take the IPO route for exit at significantly higher need to seek buyers in the secondary market.
valuations than available in the private market.
With better-than-expected Indian economic revival 4,
With large corporates acquiring start-ups to augment successful vaccination drives and abating of the COVID
their e-commerce and technology capabilities, new pools pandemic, we expect 2022 to build on the momentum
of capital are now available to provide PE/VC set in 2021. However, we remain cautiously optimistic
investments good exit opportunities. Deals like TATA’s given the significant rise in business uncertainty.
acquisition of Bigbasket for US$1.2 billion are indicative
of this emerging trend. While PE-backed IPOs were a hit We look forward to your feedback and hope you have a
among investors in 2021, the recent sharp correction in fruitful and safe 2022.

Vivek Soni
Partner and National Leader
Private Equity Services, EY India
[email protected]

4
India Economic Pulse - economic indicators and policy
measures

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1 A brief review of 2021
P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 8
A brief review of 2021
After a tough 2020, 2021 has been a spectacular year all PE/VC investments in 2021 and a rebound in
for both investors and investees alike in terms of buyouts 7 that recorded US$22 billion in investments,
investments and exits, surpassing all previous records by almost twice the value recorded last year.
a significant margin. Indian PE/VC investments in 2021
Growth investments 8 recorded US$19.6 billion across
closed at an all-time high of US$77.1 billion (62%
187 deals, 14% lower than last year (US$22.9 billion).
increase y-o-y) and exits recorded US$43.2 billion, seven
2020 had recorded large investments in Reliance group
times higher than 2020. India market performance has
entities worth US$17.3 billion. Adjusted for these one-
been in line with the global trend which recorded all-time
off large investments in 2020, growth investments have
high PE/VC investments of over US$1.5 trillion with PE
grown almost 3.5 times in 2021.
alone recoding US$1.2 trillion 5 in investments.
Private investment in public equity (PIPE) deals
► At the end of 2020, PE/VC investments were
increased by 46% to US$4.5 billion across 77 deals
already trending upwards with the roll-out of
(US$3.1 billion across 62 deals in 2020). Credit
vaccines and uncertainty around the impact of the
investments were at par with 2020 at US$2.6 billion
virus subsiding.
across 85 deals (US$2.6 billion across 74 deals in 2020).
► Further, coordinated actions from global central
Large deals continue to be a defining feature of PE/VC
banks and governments to infuse liquidity and
investments with deals of value US$100 million or
provide stimulus caused global markets to stabilize
greater accounting for 75% of all deals by value in 2021.
and rise to all-time highs.
2021 recorded 182 large deals aggregating to US$59.9
► The NIFTY50 index rose 23.7% from 14,018 on Jan billion compared to 93 large deals aggregating to
01, 2021 to 17,354 by the end of December 2021, US$38.5 billion in 2020.
mirroring similar trend across global markets. A
similar sentiment was also reflected in the private By sector:
equity industry with funds making larger
investments in successive rounds in new-age From a sector point of view, almost all major sectors
businesses as well as some traditional businesses. recorded an increase in value of investments in 2021.
Technology was the top sector with US$16.3 billion
invested across 168 deals (6.4 times increase y-o-y),
By investment strategy: highest ever value of investments in the sector. E-
One of the biggest reasons for hectic investment activity commerce sector was the next largest sector with
by PE/VC investors in 2021 was the sharp increase in US$15.9 billion invested across 203 deals (5.5 times
pure-play PE/VC investments (investments in sectors increase y-o-y).
excluding real estate and infrastructure) that recorded a Financial services with US$11.7 billion invested across
79% increase y-o-y (US$66.4 billion in 2021 compared 239 deals (US$5.4 billion across 159 deals in 2020),
to US$37.1 billion in 2020) and accounted for 87% of real estate with US$5.3 billion across 72 deals (US$5.7
total PE/VC investments by value. billion across 43 deals in 2020) and infrastructure with
Headline PE/VC investment value in 2021 was US$5.4 billion across 47 deals (US$4.8 billion across 31
significantly propped up by record PE/VC investments of deals in 2020) were the other large sectors for PE/VC
US$28.5 billion in start-ups 6 which accounted for 37% of investments.

5
EY PE Pulse 7
Buyouts are defined as acquisition of more than 50% stake
6
Start-ups are defined as companies established within past 10 8
Growth investments are defined as minority investments other
years than investment in start-ups

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 Exhibit 2: Total PE/VC investments
80,000 1,270 1,400
1,029 1,200
60,000 923
767 1,000
596 800
40,000 77,140
600
20,000 46,549 47,578 400
37,413
26,176 200
- 0
2017 2018 2019 2020 2021

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

US$m Exhibit 3: PE/VC investments: split across asset classes

80,000
5,406
5,317
60,000

4,813
40,000 4,461 12,681 5,656
4,627 6,293 66,417
2,893
20,000 5,055 37,108
28,325 27,575
18,228
-
2017 2018 2019 2020 2021

PE/VC investments (other sectors) (US$m) Real estate (US$m) Infrastructure (US$m)

Source: EY analysis of VCCEdge data

PE/VC exits: deals, which is more than the value recorded in previous
seven years combined and 14 times the value recorded
In 2021, exits recorded an all-time high of US$43.2 in 2020 (US$913 million across 20 deals).
billion, more than seven times the value recorded in
2020 and 60% more than the previous high of US$27 2021 was a record year for PE/VC-backed IPOs with
billion recorded in 2018. In terms of volume, exits exits worth US$ 5.2 billion recorded across 44 IPOs (2x
recorded an 85% increase compared to 2020 (281 deals the previous high of 22 PE/VC-backed IPOs recorded in
in 2021 vs. 151 deals in 2020). 2017) which includes many firsts for the Indian market
like the first SPAC listing by an Indian company (ReNew
Exits via sale to strategics were the highest at US$16.9 Power) and many first-time IPOs by new-age start-ups
billion (94 deals) in 2021, 16.5 times the value recorded like Zomato, Nykaa, Policybazaar and Paytm. The Paytm
in 2020 (US$1 billion across 44 deals), and second IPO was the largest ever PE-backed IPO in India as well
highest value of strategic exits ever. In terms of as the largest IPO in India’s corporate history raising
numbers, strategic deals in 2021 were the highest ever. US$2.5 billion.
Exits via secondary sale (sale to other PE/VC funds) were
second in line with US$14.4 billion recorded across 56

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 Exhibit 4: Total PE/VC exits
281
261 300
40,000
250
30,000 176 200
159 151
20,000 43,252 150
27,049 100
10,000
13,053 11,221 50
- 5,957 0
2017 2018 2019 2020 2021

Value (US$m) # of exits

Source: EY analysis of VCCEdge data

US$m Exhibit 5: PE/VC exits - split across asset classes

2,943
40,000 1,219

30,000 1,087
710
20,000 39,089
493 255
807 25,251
10,000 925
117
11,753 10,041 955
4,885
-
2017 2018 2019 2020 2021

Other sectors (US$m) Real estate (US$m) Infrastructure (US$m)

Source: EY analysis of VCCEdge data

PE/VC fund raising: year. However, fundraising by India focused funds is

expected to pick-up in 2022 on the back of record high
Fundraising has witnessed a slowdown over the past fund-raising globally in 2021. 2021 has recorded a
couple of years post onset of the pandemic. 2021 saw global surge in PE/VC fund raising, during which PE/VC
US$7.7 billion in fundraise; 6% lower than last year funds raised US$732.6 billion 9, an all-time high and a
(US$8.2 billion in 2020). There were 29 fund raises of surge of over19% compared to 2020.
US$100 million and above in 2021 compared to 13 last

Exhibit 6: Fundraise

11,687
12,000 100
10,000 90
8,092 8,238 7,747
8,000 80
5,774 70
6,000 73 60
4,000 50
56
2,000 51 40
44 42
- 30
2017 2018 2019 2020 2021

Total funds raised (US$m) Total # of funds raised

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2 Key trends of 2021
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Key trends of 2021
Buyouts record a sharp rebound

Buyouts recorded a sharp rebound in 2021 to reach an The average size of buyouts too saw a sharp increase of
all-time high value of US$22 billion, almost two times the 27% over the past two years and almost three times the
value recorded in 2020. Buyouts were severely impacted deal size between 2013-17 indicating the growing
in 2020 on account of the pandemic, recoding a steep confidence of PE funds to deploy large sums of capital in
decline of 31% y-o-y (US$11.8 billion in 2020 vs. control transactions.
US$17.2 billion in 2019). In terms of number of deals
too, 2021 recorded an all-time high of 63 deals vs. 43
deals in 2020.

Exhibit 7: Trend in buyouts

10,000 23 25
21
19
17 20
15 15
13 15
12
5,000
11
8 8,896
7,600 7 7 7,675 10
6,308 6,382
3,872 5
3,074 2,612
293 592 2,040 1,618
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$17,159m, #62) (US$11,821 m, #43) (US$21,982 m, #63)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 8: Trend in average deal size of buyouts

400
349
350
277 275
300
250 213
200
127 117 129 116
150 107
100 55 49
50
-
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Value (US$m)

Source: EY analysis of VCCEdge data

An analysis of buyout deals indicates that 79% of the 2020, 65% in 2019 and 45% in 2018. 2021 had 14 deals
value of buyouts in 2021 is accounted for by deals of of value US$500 million or higher compared to eight
value US$500 million or higher compared to 67% in such deals in 2020 and 11 in 2019.

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 Exhibit 9: Deal size (US$m) Exhibit 10: Deal size #
2020(US$11,821m), 2021(US$21,982m) 2020(43), 2021(63)

12,570 >=US$1000m 7
>= US$1000m 4
5,522
4,862 US$500m-US$1000m 7
US$500m-US$1000m 4
2,406

US$100m-US$500m 3,452 US$100m-US$500m 14

3,177 13

US$50m-US$100m 889 US$50m-US$100m 12

647 9

US$20m-US$50m 201 US$20m-US$50m 6

40 1

US$10m-US$20m US$10m-US$20m
29 2

<US$10m 8 <US$10m 2
1 1

2020 2021
Source: EY analysis of VCCEdge data
Deal value not available on 9 deals in 2020 and 15 deals in 2021

In the past decade, the PE/VC investment mix has Infrastructure and real estate sectors have dominated
changed significantly, progressing from primarily buyout activity in the past decade accounting for over
minority growth investments into one in which large 50% of all buyouts by value and 40% by volume.
buyouts have become a significant part of the overall However, in 2021, technology sector emerged as a
PE/VC investment pie (by dollar value). PE investors are preferred sector accounting for 57% of buyouts by value
likely to emerge as a new category of promoters of and 16% by volume compared to 24% by value and 10%
Indian businesses in the next decade as their embrace of by volume in the previous decade.
Buyouts Strategy comes in line with mature markets.
This trend is in line with the global shift post the
Also, the rising level of stress in corporate balance
pandemic that has seen an increase in investments in the
sheets over the previous decade has provided some
technology sector driven by acceleration in technology
attractive opportunities for PE funds to buyout
adoption by businesses and individuals.
businesses with good brands/assets at reasonable
valuations.

Exhibit 11: Top sectors by value (US$m) Exhibit 12: Top sectors by # of deals
2020(US$11,821m), 2021(US$21,982m) 2020(43), 2021(63)

Technology 12,470 Real estate 19

586 12
Real estate 2,037 Infrastructure 10
4,633 11
Infrastructure 1,608 Technology 10
2,549 3
Financial services 1,384 Financial services 6
1,029 3
1,200 Retail and consumer 4
Telecommunications
products
Retail and consumer 1,168 4
Pharmaceuticals 9
products
Pharmaceuticals 764 Industrial products 3
1,824 1
Media and entertainment 749 Media and entertainment 3

Industrial products 352 Telecommunications 1

1,000
250 Business and professional 1
Education 1
services
Others - Others 2
200 3

2020 2021

Source: EY analysis of VCCEdge data

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Exhibit 13: Top PE/VC buyouts in 2021

Amount Deal
Company/Asset Investors Sector (US$m) Stake %
Hexaware Technologies Limited Carlyle Technology 3,000 100
(BCP VIII and BCP Asia), ADIA,
Mphasis Limited Technology 2,800 56
UC Invest, and GIC
VFS Global Services Private Limited Blackstone Technology 1,870 75
Encora Advent International Technology 1,500 80
Healthcare Services Business of
Baring Private Equity Asia Technology 1,200 100
Hinduja Global Solutions Limited
Atria Convergence Technologies
Partners Group AG Telecommunications 1,200 75
Limited
ASK Group Blackstone Financial services 1,000 74
Straive Baring Private Equity Asia Technology 900 100
Infogain Co. Apax Partners Technology 800 100
Irelia Company Pte Limited Media and
IPL franchise for Ahmedabad 749 100
(CVC Capital Partners) entertainment
Embassy Industrial Parks Private Blackstone Real Estate
Real estate 715 100
Limited Partners
Retail and consumer
Vini Cosmetics Private Limited KKR and Westbridge Capital 648 56
products
Edelweiss Alternative Asset
Engie SA-Indian Solar Energy Assets Infrastructure 550 75
Advisors and others
EverYondr (Data Center Project in
Everstone, Yondr Group Infrastructure 500 50
Mumbai)
Retail and consumer
Eureka Forbes Limited Advent International 421 73
products

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 15
Growth investments have become larger and more complex
At first glance, growth investments of US$19.6 billion in previous years. This growth was not only driven by
2021 are lower by around 14% compared to 2020. higher number of deals but also by an increase in the
However, growth investments in 2020 were propped up average deal size. 2021 recorded 187 deals, 61% higher
by mega investments worth US$15.1 billion in RIL group compared to 2020 (116 deals) and an average deal size
companies. Adjusted for these one-off deals, growth of US$105 million, which is almost 50% higher than
investment in 2021 are almost 2.5 times the value earlier years except 2020 which had a higher average
recorded in 2020 (US$7.8 billion, adjusted value) and deal size due to the mega deals in RIL group companies.
more than twice the value recorded in any of the

Exhibit 14: Trend in growth investments

57 60
10,000
47 50
45
40
37 37 38 38
36 40
34

26 30
5,000
20
10,677 7,180 20
7,026

4,494 4,304
3,621 3,608 10
2,496 2,562 2,998
1,898 1,553
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$9,954 m, #152) (US$22,877 m, #116) (US$19,585 m, #187)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 15: Trend in average deal size of growth investments

250

197
200

150
105
100 84 80
65
52
45
50 29 31 35
24

-
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Value (US$m)

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 16
 Exhibit 16: Deal size (US$m) Exhibit 17: Deal size #
2020(US$22,287m), 2021(US$19,585m) 2020(116), 2021(187)

4,600 2
>=US$1000m >=US$1000m
8,033 6

2,027 3
US$500m-US$1000m US$500m-US$1000m
8,987 12

8,840 42
US$100m-US$500m US$100m-US$500m
4,076 20

2,134 30
US$50m-US$100m US$50m-US$100m
977 13

1,530 46
US$20m-US$50m US$20m-US$50m
486 15

280 18
US$10m-US$20m US$10m-US$20m
183 12

174 35
<US$10m <US$10m
135 27

2020 2021
Source: EY analysis of VCCEdge data
Deal value not available on 11 deals in 2020 and 11 deals in 2021

Eight sectors recorded over US$1 billion in growth 2020 had very low amount of growth investments across
investments in 2021 led by e-commerce, media and sectors barring telecom (US$9.9 billion) and retail
entertainment, real estate, and financial services. Like (US$6.4 billion) which received investments due to one-
VC/start-up investments, growth investors too have off mega deals in RIL group entities. In terms of number
found favour with certain new-age sectors like e- of deals, financial services, real estate, and technology
commerce, media and entertainment and education. were among the top sectors.

Exhibit 18: Top sectors by value (US$m) Exhibit 19: Top sectors by # of deals
2020(US$22,287m) , 2021(US$19,585m) 2020(116) , 2021(187)

Real estate 2,222 Financial services 34

424 24
1,831 Real estate 26
Financial services 10
671
Technology 18
1,602 3
Education
1,226 15
E-commerce 12
Automotive 1,175
Healthcare 13
3
Technology 1,140 11
345 Food and agriculture 5
1,032 Media and entertainment 10
Infrastructure 4
964
Pharmaceuticals 10
Pharmaceuticals 928 11
976
Education 9
763 9
Healthcare
46 12
Infrastructure 4
Telecommunications 220
9,915 Telecommunications 2
11
Retail and consumer 298 8
6,371 Retail and consumer 11
1,221 Others 19
Others 9
413

2020 2021
Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 17
Exhibit 20: Top growth investments in 2021

Amount Deal
Company/Asset Investors Sector (US$m) Stake %

QIA, SoftBank, Tiger Global, Tencent, GIC,

Flipkart Private Limited E-commerce 3,600 10
and others

TML EVCo TPG Rise Climate and ADQ Automotive 1,000 11

Falcon Edge, DST Global, D1 Capital, Tiger

Dream Sports Fields Private Media and
Global, TPG Capital Asia, and Footpath 840 11
Limited entertainment
Ventures

Eruditus Learning Solutions CPPIB, Accel India, SoftBank, Prosus

Education 650 20
Pte. Limited Ventures, and Sequoia Capital

NHAI InvIT CPPIB and OTPP Infrastructure 537 50

Think and Learn Private MC Global Edtech Investment Holdings LP.,

Education 460 NA
Limited (BYJU’s) B Capital, and others

Verse Innovation Private Siguler Guff India Advisors, QIA, B Capital, Media and
450 NA
Limited (Dailyhunt) Sofina SA, Carlyle, and others entertainment

Steadview Capital, Tiger Global, TPG,

Sporta Technologies Private Media and
ChrysCapital, D1 Capital Partners, Falcon 400 NA
Limited (Dream11) entertainment
Edge, and others

Think and Learn Private

UBS, Blackstone, ADQ, and others Education 400 2
Limited (BYJU’s)

RMZ Corp, construction

CPPIB Real estate 340 NA
projects JV

Aragen Life Sciences Private

Goldman Sachs (Principal Investments) Pharmaceuticals 333 33
Limited

YV Capital, D1 Capital, Steadview, and MVP

Zomato Private Limited E-commerce 319 NA
Fund

BrainBees Solutions Private Chryscapital, TPG Growth V LP, and

E-commerce 313 NA
Limited (FirstCry) Premjiinvest

Tiger Global, Kora Investments, Steadview,

Zomato Private Limited Fidelity, Bow Wave, Vy Capital, and E-commerce 250 NA
Dragoneer Group

AG&P City Gas I Squared Capital Oil and gas 300 NA

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 18
India emerging as a leading ecosystem for start-up/venture capital investments

2021 has been a record year for VC/start-up a y-o-y basis (US$11.7 billion in 2019) despite the
investments, recording an all-time high of US$28.5 number of deals declining by only 8% (628 deals in 2020
billion which is almost four times the value recorded in vs. 681 deals in 2019). After the onset of the pandemic,
2020 (US$7.3 billion) and is almost equal to the total VC/start-up investments declined to a trickle (US$238
value of VC/start-up investments in the previous three million in May 2020) as VC funds became more risk
years combined. Start-ups have emerged as the largest averse and refrained from investing in start-ups which
deal segment in 2021 accounting for 37% of total PE/VC traditionally had high cash burn rates. However, as the
investments. By deal volume, VC/start-up investment pandemic progressed, there was an accelerated adoption
deals have been the highest ever at 858 deals, 37% of e-commerce/tech enabled businesses globally as well
higher than last year which recorded 628 deals. as in India, driven by the ease of use and convenience it
provided. The pandemic also accelerated the learning
As a fallout of the pandemic, VC/start-up investments
curve for technology adoption and online commerce
were amongst the worst hit in 2020, declining by 38% on
among the less tech savvy and first-time users.

Exhibit 21: Trend in VC/start-up investments

350
10,000 298
300

232 250

180 179 174 172 175 200

162 153
148 150 144
5,000 10,220 9,641
150

6,049 100
4,319
2,842 50
2,521 2,487 2,368 1,994 2,199
1,705 1,357
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$11,695 m, #681) (US$7,255 m, #628) (US$28,480 m, #858)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 22: Trend in average deal size of VC/start-up investments

40 36

29
30 26
21 22
20 15
14 13 12
10 7 7

-
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Value (US$m)

Source: EY analysis of VCCEdge data

As a result, 2021 recorded a strong pick-up in deal While average deal size in the start-up space continues
activity with average monthly VC/start-up investments to remain small at around US$36 million with 51% of
of around US$2 billion compared to US$600-800 million deals being less than US$10 million in value, the average
in the past couple of years. deal size in 2021 is highest ever after a declining trend

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 19
since the peak of US$29 million in 2017. Further, there the number of similar deals in 2020 (35 deals worth
has been a sharp increase in large investment rounds in US$3.9 billion). These large deals account for 76% of all
start-ups (value greater than US$50 million) in 2021, start-up investment value in 2021 compared to 54% in
which has recorded 133 deals of value greater than 2020.
US$50 million aggregating US$21.7 billion, 3.5 times

Exhibit 23: Deal size (US$m) Exhibit 24: Deal size #

2020(US$7,255m), 2021(US$28,480m) 2020(628), 2021(858)

US$500m-US$1000m 2,372 4
US$500m-US$1000m

US$100m-US$500m 16,057 83
2,854 US$100m-US$500m 20
US$50m-US$100m 3,223 46
1,073 US$50m-US$100m 15
US$20m-US$50m 3,607 108
1,618 US$20m-US$50m 49
US$10m-US$20m 1,515 104
624 US$10m-US$20m 42
<US$10m 1,707 <US$10m 437
1,085 368

2020 2021
Source: EY analysis of VCCEdge data
Deal value not available on 134 deals in 2020 and 76 deals in 2021

E-commerce, financial services (fintech), technology, VC/start-up funding (over five times the value recorded
media and entertainment, education and healthcare in 2020 of US$1.4 billion) and accounting for 25.5% of
were the top sectors for VC/start-up investments VC/start-up investment in 2021.
recording over US$1 billion in investment each. E-
These sectors were also highest in terms of number of
commerce received the highest VC/start-up investments
deals with e-commerce, financials services and
in 2021 of US$9.7 billion (six times the value recorded in
technology each recording over 100 deals in 2021 vs.
2020 of US$1.6 billion), accounting for 33% of VC/start-
2020 which had only e-commerce record more than 100
up investments in 2021, which is also the highest ever
deals.
VC/start-up investment in any sector, followed by
financial services that received US$7.3 billion in

Exhibit 25: Top sectors by value (US$m) Exhibit 26: Top sectors by # of deals
2020(US$7,255m) , 2021(US$28,480m) 2020(628) , 2021(858)

E-commerce 9,654 167

1,584 E-commerce 121
Financial services 7,258 Financial services 159
1,399 92
Technology 2,477 Technology 132
1,020 92
Education 1,909 Education 77
878 62
Media and entertainment 1,813 Healthcare 67
303 42
Healthcare 1,127 Food and agriculture 66
292 46
Logistics and transportation 922 Media and entertainment 58
487 54
Food and agriculture 832 Retail and consumer 41
193 31
Real estate 521 Logistics and transportation 27
243 24
Automotive 502 Automotive 17
4 7
Others 1,465 Others 47
852 57

2020 2021
Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 20
Exhibit 27: Top VC/start-up investments in 2021

Amount
Company/Asset Investors Sector (US$m) Deal Stake %
Bundl Technologies Private Falcon Edge Capital, Prosus Ventures,
E-commerce 800 16
Limited (Swiggy) Accel India, Think Capital GIC, and others
Prosus Ventures, SoftBank, B Capital, and
Meesho Inc. E-commerce 570 NA
others
Mohalla Tech Private Limited India Quotient Fund, Lightspeed, Twitter Media and
502 NA
(ShareChat) Ventures, and Tiger Global entertainment

ANI Technologies Private

Temasek, Warburg Pincus, and others E-commerce 500 NA
Limited (Ola)

Bundl Technologies Private

Softbank E-commerce 450 9
Limited (Swiggy)
Cars24 Services Private DST Global, Moore Capital, SoftBank,
E-commerce 450 24
Limited Tencent, and others
Sorting Hat Technologies Tiger Global, General Atlantic, SoftBank,
Education 440 13
Private Limited (Unacademy) Temasek, and others
Razorpay Software Private Alkeon Capital Management, GIC, Sequoia Financial
375 5
Limited Capital, Tiger Global, and others services
Ribbit Capital, Amplo, Coatue
Resilient Innovations Private Management, Insight Venture, Sequoia Financial
370 13
Limited (BharatPe) Capital, Dragoneer Investment, Tiger services
Global, and others

Source: EY analysis of VCCEdge data

On the back of this large and ever-increasing VC funding, The emergence of new models in fintech, media and e-
India is becoming the world's fastest-growing start-up commerce has revitalized funding in these sectors.
ecosystem. India overtook the UK as the third largest
Fintech’s lead is largely due to the rising adoption of
ecosystem for start-ups 10 in 2021, with over 80 unicorn
digital and retail payments solutions, neo-banking, defi
start-ups as of 2021 which includes more than 50% (44
and crypto exchanges, and API technology for lending,
unicorns) added in 2021 compared to 15 unicorns added
insurance, and banking as well as emerging solutions like
by UK. The leading countries - the US added 254
buy now pay later (BNPL) and finance process
unicorns whereas China saw 74 unicorns added in 2021.
automation.
The 44 unicorns that were added in 2021 had a total
Disruptions in the consumer sector with quick commerce
valuation of US$90.7 billion 11, a record year for the
as well as D2C platforms is attracting VC capital.
country. 2020 and 2019 saw 10 and 9 unicorns,
respectively. Bengaluru is India’s unicorn capital with the In media and entertainment, it is the gaming platforms,
highest number of unicorns headquartered there, content creators and aggregators with varying niches
followed by Delhi (NCR) and Mumbai. that are attracting VC capital.

With the time to achieve unicorn status shrinking from COVID-19 has accelerated digital adoption and the shift
10-12 years to as low as two years there are almost 80 to online in the country. This has created new
start-ups in the soonicorn list with most expected to opportunities for tech start-ups that are capitalizing on
become unicorns in 2022 provided the PE/VC the same with rapid digital acceleration and a shift to
investment momentum continues. A majority of these SaaS-based solutions.
are in the fintech, consumer internet, education,
enterprise tech and media and entertainment sectors.

10
The Hurun Research Institute's Global Unicorn Index 2021 11
Venture intelligence unicorn tracker

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 21
 Exhibit 28: Trend in number of start-ups attaining unicorn status each year

70 70*

60

50
44
40

30

20

10 9 10
8
4
- 1 1 1 1 2
2011 2012 2013 2014 2015 2016 2018 2019 2020 2021 2022

Source: EY analysis of Venture Intelligence data

*Estimate based on number of soonicorns

Exhibit 29: Sectoral split of unicorns by Exhibit 30: Sectoral split of unicorns by
value (US$ billion) - 2021 volume - 2021
2 , 3% 1 , 1% 1 , 2% 1 , 2%
3 , 3% 2 , 5%

5 , 6%
3 , 7%
14 , 15% 35 , 38%
5 , 11% 19 , 43%

31 , 34% 13 , 30%

E-commerce Financial services Technology Education

Healthcare Logistics Media and entertainment

Source: EY analysis of Venture Intelligence data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 22
Exhibit 31:

Sub-sector split of unicorns by value (US$ billion) – 2021

Logistics
Media and
Entertainment

Logitech
1

Sub-sector split of unicorns by volume - 2021

Entertainment

Logistics
Media and

Logitech
1

Source: EY analysis of Venture Intelligence data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 23
Large deals are becoming larger and more broad-based with a shift towards new-age
businesses
2021 has recorded an all-time high on the back of prominence of large deals has been a continuing feature
growing number and size of large deals (deals of value of PE/VC investments in India, accounting for 78% of all
US$100 million and higher). Large deals in 2021 almost deals by value in 2021.
doubled in volume compared to last year. The growing

Exhibit 32: Trend in large deals (value >= US$100 m)

70
20,000 59
53 60
15,000 42 50
40
34 40
30 20,886 19,464
10,000 26 27 26
24 30
21 16,403
13,345 12,810 20
5,000 12 11,641
8,587 8,217
6,469 6,610 6,710 10
2,275
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$35,011 m, #119) (US$38,535 m, #93) (US$59,869 m, #182)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 33: Trend in average and median deal size

70 61
60 52
49
50 44 45

40
25 26 28
30 22 23
18
20 10 10 10 12
9 9 9 9 6
10
- 11 10
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Average (US$ million) Median (US$ million)

Source: EY analysis of VCCEdge data

Exhibit 34: Deal size (US$m) Exhibit 35: Deal size #

2020(US$38,535m) , 2021(US59,869m) 2020(93) , 2021(182)

17,170 9
>=US$1000m >=US$1000m
13,555 10

11,744 18
US$500m-US$1000m US$500m-US$1000m
12,523 18

30,956 155
US$100m-US$500m US$100m-US$500m
12,457 65

2020 2021
Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 24
While the traditional sectors like infrastructure, real Further, the instances of mega deals have also become
estate and financial services continue to be among the broad-based with sectors like automotive and media and
preferred sectors for large capital deployment, there has entertainment too recording large deals of value greater
been a gradual increase in large and mega deals in the e- than US$500 million driven by new emerging PE/VC
commerce and technology sectors. E-commerce and investment themes like electric vehicles, gaming, and
technology accounted for 46% of large deals by value sports-based entertainment.
and 32% by volume in 2021.

Exhibit 36: Top sectors by value (US$m) Exhibit 37: Top sectors by # of deals
2020(US$38,535m) , 2021(US59,869m) 2020(93) , 2021(182)
Technology 14,535 E-commerce 38
1,841 7
E-commerce 13,287 34
1,605 Financial services 14
Financial services 7,957 22
3,072 Technology 7
Infrastructure 5,031
4,562 Real estate 16
6
Media and entertainment 4,314
325 Infrastructure 15
3,204 12
Real estate 4,510
Media and entertainment 13
2,875 2
Education 1,795
Education 9
Pharmaceuticals 1,712 10
2,698
Pharmaceuticals 8
Automotive 1,400 9
150
Healthcare 6
Telecommunications 1,400 1
9,818
1,100 Logistics 4
Healthcare 112 3
Others 3,190 Others 16
8,048 22

2020 2021
Source: EY analysis of VCCEdge data

Exhibit 38: Top large deals in 2021

Amount Deal
Company/Asset Investors Sector Stage (US$m) Stake %
QIA, SoftBank, Tiger Global, Tencent,
Flipkart Private Limited E-commerce Growth 3,600 10
GIC, and others
(BCP VIII and BCP Asia), ADIA, UC
Mphasis Limited Technology Buyout 2,800 56
Invest, and GIC
TML EVCo TPG Rise Climate and ADQ Automotive Growth 1,000 11
Falcon Edge Capital, Prosus Ventures,
Bundl Technologies Private
Accel India, Think Capital GIC, and E-commerce Start-up 800 16
Limited (Swiggy)
others
IRB Infrastructure Developers
GIC and Ferrovial S.A. Infrastructure PIPE 712 42
Limited
Eruditus Learning Solutions CPPIB, Accel India, SoftBank, Prosus
Education Growth 650 20
Pte. Limited Ventures, and Sequoia Capital
CPPIB and Ontario Teachers’ Pension
NHAI InvIT Infrastructure Growth 537 50
Plan Board
ANI Technologies Private Temasek, Warburg Pincus, and Broad
E-commerce Start-up 500 NA
Limited (Ola) Peak Investment Advisers
Verse Innovation Private Siguler Guff India Advisors, QIA, B Media and
Growth 450 NA
Limited (Dailyhunt) Capital, Sofina SA, Carlyle, and others entertainment
Sorting Hat Technologies Tiger Global, General Atlantic,
Education Start-up 440 13
Private Limited (Unacademy) SoftBank, Temasek, and others

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 25
Investments by pension funds and sovereign wealth funds (SWFs) are at an all-time
high with an increased exposure to start-ups
Direct investments from pension funds and sovereign these funds took the LP route but are now increasingly
wealth funds have been a major contributor to the seeking direct and co-investing opportunities in the India
tremendous growth seen in PE/VC investments in India. market.
Direct investments by these funds have recorded an all-
Globally, pension funds tend to invest significant
time high of US$20.8 billion across 91 deals in 2021,
amounts in real assets (infrastructure and real estate),
accounting for 27% of all PE/VC investments and almost
while securing long-term cash flow returns to match
twice the value recorded in 2020.
their long-term pension liabilities. While in the last
While traditionally pension funds and SWFs have been decade infrastructure, real estate and financial services
growth capital investors, they have made significant have been the top sectors of interest for SWFs and
investments in start-ups in 2021. AT US$6 billion, pension funds investing directly in India, the mix has
investments in start-ups account for 29% of all changed in 2021. E-commerce (US$7.2 billion) and
investments by pension funds and SWFs, which is 10 technology (US$3 billion) were the top two sectors
times the value invested last year and four times the accounting for 49% of all investments by pension funds
highest value invested till date. and SWFs in 2021, which is also the reason for the high
value of start-up investments by these funds. Within e-
Going forward, their share in investments in India is
commerce, pension funds and SWFs have invested in
expected to increase further as many new pension funds
B2C retail, online pharmacies, hyperlocal delivery, and
and SWFs are looking to enter the India market and
mobility.
those that are already present are looking to increase
their India/emerging market allocations. Earlier, many of

Exhibit 39: Trend in investments by pension funds and SWFs

8,000 35
30
30
26
6,000 24
25

20
4,000
13 13 7,417
12 6,805 15
5,933 11
10 10
9 5,252
7 10
2,000 3,815
5
2,787
2,376 2,029 2,241 5
427 900 1,303
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$9,432 m, #44) (US$11,074 m, #35) (US$20,777 m, #91)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Note: complete value of the deal is attributed to pension funds/SWFs when multiple investors are involved in a deal as generally
pension funds/SWFs are the lead investors when they are involved in any deal

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 26
 Exhibit 40: Top sectors by value (US$m) Exhibit 41: Top sectors by # of deals
2020(US$11,074m) , 2021(US20,777m) 2020(35) , 2021(91)

E-commerce 7,228 E-commerce 17

226 4

Technology 2,997 16
Financial services
11

Financial services 2,125 9

Real estate
1,947 7

Infrastructure 1,780 9
Infrastructure
4,488 4

Education 1,657 6
Education
150

Real estate 1,259 6

Technology
878

Automotive 1,108 5
Healthcare
179 1

Healthcare 1,009 4
Media and entertainment
57

Media and entertainment 962 4

Pharmaceuticals
133

Logistics 327 4
Food and agriculture
200

Others 325 11
Others
1,173 8

2020 2021
Source: EY analysis of VCCEdge data
Note: complete value of the deal is attributed to pension funds/SWFs when multiple investors are involved in a deal as generally
pension funds/SWFs are the lead investors when they are involved in any deal

Exhibit 42: Deal type (US$m) Exhibit 43: Deal type #

2020(US$11,074m) , 2021(US20,777m) 2020(35) , 2021(91)

27 1
Credit investment Credit investment

3,200 2
Buyout Buyout
1,868 5

2,368 33
PIPE PIPE
904 12

5,980 29
Start-up Start-up
595 5

9,202 26
Growth capital Growth capital
7,707 13

2020 2021
Source: EY analysis of VCCEdge data
Note: complete value of the deal is attributed to pension funds/SWFs when multiple investors are involved in a deal as generally
pension funds/SWFs are the lead investors when they are involved in any deal

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 27
Exhibit 44: Top investments involving pension funds and SWFs in 2021

Amount Deal
Company/Asset Investors Sector Stage (US$m) Stake %

Flipkart Private Limited

GIC, QIA, SoftBank, Tiger E-commerce Growth capital 3,600 10
Global, Tencent, and others

Mphasis Limited
GIC, ADIA, and (BCP VIII Technology Buyout 2,800 56
and BCP Asia), UC Invest

TML EVCo ADQ and TPG Rise Climate Automotive Growth capital 1,000 11

GIC, Falcon Edge Capital,

Bundl Technologies Private Prosus Ventures, Accel E-commerce Start-up 800 16
Limited (Swiggy) India, Think Capital, and
others
IRB Infrastructure
Developers Limited
GIC and Ferrovial S.A. Infrastructure PIPE 712 42

Eruditus Learning Solutions

CPPIB, Accel India,
SoftBank, Prosus Ventures, Education Growth capital 650 20
Pte. Limited
and Sequoia Capital
CPPIB and Ontario
NHAI InVIT Teachers’ Pension Plan Infrastructure Growth capital 537 50
Board
ANI Technologies Private Temasek and Warburg E-commerce Start-up 500 NA
Limited (Ola) Pincus

Verse Innovation Private

QIA, Siguler Guff India Media and
Advisors, B Capital, Sofina Growth capital 450 NA
Limited (Dailyhunt) entertainment
SA, Carlyle, and others

Sorting Hat Technologies

Temasek, Tiger Global,
Education Start-up 440 13
Private Limited (Unacademy) General Atlantic, SoftBank,
and others
Zydus Animal Health and
Investments Limited (Zydus CPPIB and Multiples Pharmaceuticals Buyout 400 100
AH)
Think and Learn Private ADQ, UBS, Blackstone, and Education Growth capital 400 2
Limited (BYJU’s) IIFL
GIC, Alkeon Capital
Razorpay Software Private Management, Sequoia Financial services Start-up 375 5
Limited Capital, Tiger Global, and
others
API Holdings Private Limited Temasek, TPG Capital, and E-commerce Start-up 350 7
(Pharmeasy) Naspers

Source: EY analysis of VCCEdge data

Note: complete value of the deal is attributed to pension funds/SWFs when multiple investors are involved in a deal as generally
pension funds/SWFs are the lead investors when they are involved in any deal

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 28
Though PE fundraising grew, overall fundraising slowed down due to absence of
fundraises by infrastructure funds
The last five years witnessed US$44.6 billion raised by dedicated fundraise in 2021 vs. US$2.3 billion raised
India dedicated funds. India dedicated PE/VC fundraising last year.
was on an uptrend until 2019. However, on account of
From a sectoral allocation perspective, more than 50%
the pandemic, fundraising witnessed a slowdown for two
(US$4.1 billion) of the funds raised were for sector
years (2020-2021). 2021 recorded India dedicated
agnostic deployment followed by technology sector
fundraise of US$7.7 billion, a 6% decline y-o-y. This was
accounting for 19% (US$1.5 billion) and real estate
despite a surge in global PE/VC fundraising to an all-time
accounting for 17% (US$1.3 billion). Clean energy has
high of US$732.6 billion 12.
been an emerging theme which saw US$200 million in
The PE asset class was the largest at US$3.1 billion and fundraise in 2021 vs. US$500 million last year.
accounted for 40% of all the PE/VC fundraises in 2021
Despite the slowdown in overall fundraising there were
followed by VC funds at USS$1.7 billion (22%), venture
many first-time fundraises in 2021 which recorded
debt at US$1.4 billion (18%) and real estate funds at
US$1.8 billion in first-time fundraises by 28 funds
US$1.3 billion (17%). There was no infrastructure
compared to US$1.3 billion raised by 21 funds in 2020.

Exhibit 45: Trend in fundraises

8,000 23 25
20
20
6,000
15 15 15 15
14 14
13 15
12
4,000 10
10
5
2,000 3,809 3,869
2,794 3,355 5
2,749 2,335 2,768
1,430 171 1,713 1,048 1,631
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$11,687 m, #56) (US$8,238 m, #42) (US$7,747 m, #73)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 46: Fund type (US$m) Exhibit 47: Sector (US$m)

2020(US$8,238m) , 2021(US7,747m) 2020(US$8,238m) , 2021(US7,747m)

- Infrastructure -
Infrastructure 2,340
2,340
Food and agriculture 60
67 -
Credit
1,215 Lifesciences 150
21
Stressed assets 100 191
21 Financial services 176
1,319 Clean energy 207
Real estate 500
14
Retail and consumer 221
1,413 46
Venture debt
62 1,346
Real estate 14
Venture capital 1,720
2,908 Technology 1,510
1,619
3,129 Sector agnostic 4,062
Private equity 3,523
1,679

2020 2021
Source: EY analysis of VCCEdge data

12
https://www.privateequityinternational.com/fundraising-hit-a-
new-full-year-record-in-2021/

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 29
Exhibit 48: Top fundraises in 2021

Amount raised
Fund (US$m) Type Strategy

A91 Partners' Fund-II 525 Private equity Sector agnostic

EvolutionX Debt Capital 500 Venture debt Sector agnostic

Godrej Fund Management (GBTC II) 500 Real estate Premium office assets

Early and late-stage real estate

Kotak Real Estate Fund XI 380 Real estate
projects

Chiratae Ventures Fund IV 337 Private equity Technology

Godrej Fund Management - Office

250 Real estate Office buildings
Platform
Sports, gaming, and fitness-tech
Dream Capital 250 Private equity
start-ups

Alteria Capital Venture Debt Fund 2 243 Venture debt Sector agnostic

Seed and series A rounds of

Stellaris Venture Partners Fund 2 225 Venture capital
internet start-ups
Series B and follow-on rounds of
Jungle Ventures Fund IV 225 Private equity
start-ups

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 30
P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 31
3 Analysis of sectoral
performance – 2021
P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 32
Analysis of sectoral performance – 2021
PE/VC investment activity in 2021 was dominated by did not record significant growth in investments. Instead,
three sectors that have accounted for almost 50% of the 2021 saw investor interest peak in sectors like education
deal activity by value as well as volume. Technology, and media and entertainment that recorded investments
e-commerce, and financial services were the top three worth US$3.8 billion and US$4.9 billion respectively due
sectors each recording over US$10 billion in investments to emergence of new-age business models like online
and more than 150 deals. In total, there were 14 sectors education, media streaming and gaming/sports
that received over US$1 billion in investments in 2021. entertainment that witnessed strong consumer adoption
during the pandemic.
Despite the all-time high investments recorded in 2021,
traditional favorites like real estate and infrastructure

Exhibit 49: Top sectors by value (US$m) - 2020(US$47,578m), 2021(US$77,140m)

Sectors 2020 2021

Technology 2,551 16,277
E-commerce 2,838 15,890
Financial services 5,360 11,688
Infrastructure 4,813 5,406
Real estate 5,656 5,317
Media and entertainment 730 4,947
Education 2,114 3,763
Pharmaceuticals 3,325 2,307
Healthcare 490 2,083
Retail and consumer products 6,659 1,959
Automotive 165 1,749
Telecommunications 9,915 1,420
Food and agriculture 424 1,276
Logistics and transportation 877 1,252
Industrial products 1,206 506
Business and professional services 236 421
Cement and building products 85 327
Oil and gas 300
Metals and mining 68 94
Aerospace and defense 13 83
Chemicals 53 74

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 33
Exhibit 50: Top sectors by # of deals - 2020(923), 2021(1,270)

Sectors 2020 2021

Financial services 159 239
E-commerce 149 203
Technology 104 168
Food and agriculture 63 89
Education 74 88
Healthcare 50 85
Media and entertainment 61 76
Real estate 43 72
Retail and consumer products 50 63
Infrastructure 31 47
Logistics and transportation 35 33
Pharmaceuticals 38 31
Automotive 9 26
Industrial products 15 14
Business and professional services 17 12
Aerospace and defense 3 10
Chemicals 5 5
Telecommunications 11 3
Cement and building products 3 3
Metals and mining 3 2
Oil and gas 1

Source: EY analysis of VCCEdge data

The following section covers key highlights of some of the prominent sectors in 2021:

Technology sector investments soar on the back of multiple global tailwinds

In the previous decade, technology sector was the most profitability metrics due to emergence of SaaS, cloud
preferred sector by PE/VC funds, and it continues to storage and accelerated adoption of digital among
dominate PE/VC investments in 2021 with investment businesses. Technology is increasingly becoming more
worth US$16.3 billion, 21% of all investments during the than just an enabler to businesses but is forming a part
year. This is also the highest ever annual investment of their critical infrastructure.
value not only in the technology sector but for any
IT services received the maximum PE/VC investments
sector till date. Investments in the technology sector in
followed by ITES with US$7.9 billion and US$4.4 billion
2021 have been more than the total investments
respectively. However, over the recent years SaaS has
received by the sector in the previous six years
emerged as one of the leading sub-sectors within
combined. This is in line with the global trend which saw
technology, which has recorded the highest number of
30% of the over US$1 trillion PE investments in 2021
PE/VC deals in 2021 (104 deals).
allocated to technology companies.
In terms of value, buyouts were the highest at US$12.5
The technology sector has been one of the most resilient
billion on account of few large buyouts in the IT
sectors during the pandemic. In fact, COVID-19 has
consulting and services space by large buyout funds.
accelerated the adoption of technology with corporates
However, in terms of number of deals, start-up
embarking on digitization roadmaps to prepare for the
investments were the highest at 132 deals dominated by
working environment of the future characterized by
investments in SaaS based business models which
automation, remote working, high levels of efficiency,
accounted for 72% (95 deals) of all start-up deals in the
and analytics driven business intelligence.
technology sector.
One major factor that is attracting PE/VC investors to
technology is the improvement in scalability and

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 34
 Exhibit 51: Trend in investments in technology sector
8,000 60 70
7,000 56
60
6,000 50
5,000 37
34 32 33 40
4,000 28 26 27 7,828
24 30
3,000 19 19
2,000 4,518 20
3,499
1,000 10
819 1,080 1,538 511 248 341 976 985 432
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$3,948 m, #123) (US$2,551 m, #104) (US$16,277 m, #168)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 52: Top sub-sectors by value(US$m) Exhibit 53: Top sub-sectors by # of deals
2020(US$2,551m), 2021(US$16,277m) 2020(104), 2021(168)

7,952 2
IT consulting services IT hardware
1,386 3

4,400 2
ITeS Internet services
1

2,999 10
SaaS ITeS
992 -

616 23
Software Software
83 5

175 27
IT hardware IT services
90 13

135 104
Internet services SaaS
- 82

2020 2021
Source: EY analysis of VCCEdge data

Exhibit 54: Deal type (US$m) Exhibit 55: Deal type #

2020(US$2,551m) , 2021(US$16,277m) 2020(104), 2021(168)

4 2
Credit investment Credit investment
6 2

12,470 10
Buyout Buyout
586 3

187 6
PIPE PIPE
594 3

2,477 132
Start-up Start-up
1,020 92

1,140 18
Growth capital Growth capital
345 4

2020 2021
Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 35
Exhibit 56: Top technology sector investments in 2021

Amount Deal
Company/Asset Investors Sub-sector Stage (US$m) Stake %
Hexaware Technologies Limited Carlyle IT services Buyout 3,000 100
(BCP VIII and BCP Asia), ADIA, UC
Mphasis Limited IT services Buyout 2,800 56
Invest, and GIC
VFS Global Services Private Limited Blackstone ITES Buyout 1,870 75
Encora Advent IT services Buyout 1,500 80
Healthcare Services Business of,
Baring Private Equity Asia ITES Buyout 1,200 100
Hinduja Global Solutions Limited
Straive Baring Private Equity Asia ITES Buyout 900 100
Infogain Co. Apax Partners SaaS Buyout 800 100
ResultsCX ChrysCapital ITES Buyout 400 100
GupShup Technology India Private Think Investments, Tiger Global, White Growth
SaaS 240 17
Limited Oak Capital and others capital
Nexus India Capital Advisors, Insight
Postdot Technologies Private
Venture, Coatue Management, and SaaS Start-up 225 4
Limited
others
Browserstack Software Private Accel India, Bond Capital, Insight
SaaS Start-up 200 5
Limited Venture, and Accel
Zenwork Labs India Private Limited Spectrum Equity Management, L.P. SaaS Start-up 161 NA
Growth
QuEST Global Services Pte. Limited ChrysCapital and True North IT services 150 8
capital
NetraDyne Inc. SoftBank and others SaaS Start-up 150 15
Neuberger Berman, Viking Global
Growth
Druva Inc. Investors, Quebec Deposit and IT services 147 NA
capital
Investment Fund, and others

Source: EY analysis of VCCEdge data

E-commerce sector expected to be the fastest growing sector in India

The e-commerce sector has become one of the Established e-commerce businesses are seeing multiple
predominant sectors for PE/VC investments in 2021 rounds of investments, within a short span of time, at
recording US$15.9 billion, accounting for 21% of the progressively higher valuations. As a result, many large
total PE/VC investments in 2021 and more than five established players have now amassed a significant war-
times the investments received in 2020. PE/VC chest to further accelerate growth both organically and
investments in e-commerce in 2021 are the highest ever inorganically. This is also driving consolidation in the
for the sector. The share of e-commerce would be even sector.
higher if we were to include other tech enabled online
The interest was high not only amongst private capital
platform businesses like OTT streaming, e-learning,
investors, but also public equity investors as witnessed in
fintech, Logitech, etc. that have been excluded for this
the strong response to recent IPOs of e-commerce
analysis (part of the parent sector vertical).
platforms like Zomato, Policybazaar, Nykaa etc. Investor
After the onset of the pandemic, amidst the ensuing interest in e-commerce has been so great that past
uncertainty, PE/VC investments in e-commerce declined investors have re-entered positions with their erstwhile
to a trickle (US$32 million in May 2020) as funds investees at higher valuations, after having fully exited
became more risk averse and refrained from investing in from them in the past, as seen in the latest US$3.6
e-commerce companies that traditionally had high cash billion funding round in Flipkart by Softbank, Tiger Global
burn rates. However, as the pandemic progressed, there and others.
was an accelerated adoption of e-commerce globally as
In B2C (business-to-consumer) e-commerce, both the
well as in India driven by the ease of use and
traditional horizontal formats like Flipkart, as well as
convenience it provided. The pandemic also accelerated
specialized vertical formats like Pepperfry, Urban
the learning curve for technology adoption and online
Ladder, Firstcry and hybrid B2B/B2C models like Mogilix
commerce among the less tech savvy and first-time
have seen significant PE/VC investments. Further, the
users.
emergence of influencer and social media led marketing

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 36
and brand building has led to the emergence of a new and faster delivery to challenge the dominance of local
segment of B2C model called D2C (direct-to-consumer) pharmacies.
driven by brands like MyGlamm, WoW Skin Science,
The pandemic has widened the chasm between the
Mamaearth, etc. that are witnessing significant investor
stronger players and the mid-tier ones, and has
interest.
propelled the larger players into another orbit, who are
The pandemic has also given a fillip to the demand for now driving consolidation in each of their respective sub-
hyperlocal food and grocery delivery platforms like segments.
Swiggy, Zomato, Bigbasket, Blinkit etc., thus boosting
A young demography, increasing internet and
their GMVs and valuations.
smartphone penetration, and relatively better economic
Another beneficiary of the pandemic has been performance are some key drivers of this sector.
healthcare delivery which has seen faster adoption of
The growth in e-commerce will also drive allied industries
telemedicine as well as increased penetration by e-
such as logistics, supply chain, agri-tech and
pharmacy platforms that have really raised their game
omnichannel sales solutions, which have already
by ensuring availability of SKU’s, competitive pricing,
received higher investments in 2021.

Exhibit 57: Trend in investments in e-commerce sector

8,000 62 70
59
7,000 60
49 49
6,000 43 50
41 40
5,000 34 35 36
33 40
30
4,000 8,021
30
3,000
2,000 20
2,376 2,592 2,901 10
1,000 888 680 2,086 1,146 598 311 634 1,294
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$4,801 m, #159) (US$2,838 m, #149) (US$15,890 m, #203)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 58: Top sub-sectors by value(US$m) Exhibit 59: Top sub-sectors by # of deals
2020(US$2,838m) , 2021(US$15,890m) 2020(149) , 2021(203)

5,321 B2C 62
B2C 350 44

Hyperlocal 2,257 Hyperlocal 20

1,449 18
B2B 1,919 B2B 42
123 17
Mobility 1,587 Mobility 18
119 12
Online pharmacies 1,314 Online pharmacies 12
259 4
Social 1,009 10
85 Social 18
Online booking services 928 9
19 Online booking services 4
Online auto portals 866 9
287 Online auto portals 7
Online classified 427 13
56 Online classified 15
Foodtech 247 6
92 Foodtech 10
Other services 15 2
0 Other services -

2020 2021
Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 37
 Exhibit 60: Deal type (US$m) Exhibit 61: Deal type #
2020(US$2,838m) , 2021(US$15,890m) 2020(149) , 2021(203)

982 18
Credit investment Credit investment
74 14

- -
Buyout Buyout
- -

324 4
PIPE PIPE
13 3

9,654 167
Start-up Start-up
1,584 121

4,930 14
Growth capital Growth capital
1,167 11

2020 2021
Source: EY analysis of VCCEdge data

Exhibit 62: Top e-commerce sector investments in 2021

Amount Deal
Company/Asset Investors Stage Sub-sector (US$m) Stake %
QIA, SoftBank, Tiger Global, Tencent, Growth
Flipkart Private Limited B2C 3,600 10
GIC, and others capital
Falcon Edge Capital, Prosus
Bundl Technologies Private
Ventures, Accel India, Think Capital Hyperlocal Start-up 800 16
Limited (Swiggy)
GIC, and others
OYO Hotels and Homes Fidelity, Citadel Capital Management, Online booking Credit
660 NA
Private Limited and Varde Partners services investment
Prosus Ventures, SoftBank, B Capital,
Meesho Inc. Social Start-up 570 NA
and others
ANI Technologies Private Temasek, Warburg Pincus, and
Mobility Start-up 500 NA
Limited (Ola) others
Bundl Technologies Private
Softbank Hyperlocal Start-up 450 9
Limited (Swiggy)
Cars24 Services Private DST Global, Moore Capital, SoftBank, Online auto
Start-up 450 24
Limited Tencent, and others portals
Steadview Capital, Amansa Capital,
API Holdings Private Limited ApaH Capital (Blackstone), Janus Online
Start-up 350 6
(Pharmeasy) Henderson, OrbiMed, ADQ, and Pharmacies
others
API Holdings Private Limited Online
TPG Capital, Temasek, and Naspers Start-up 350 7
(Pharmeasy) Pharmacies
FSN E-Commerce Ventures
CPPIB, GIC, Blackrock, and Fidelity B2C PIPE 324 NA
Limited (Nykaa)
YV Capital, D1 Capital, Steadview, Growth
Zomato Private Limited Hyperlocal 319 NA
and MVP Fund capital
BrainBees Solutions Private Chryscapital, TPG Growth V LP, and Growth
B2C 313 NA
Limited (FirstCry) Premjiinvest capital
Prosus Ventures, Shunwei Capital
Meesho Inc. Partners, Venture Highway LLP, Social Start-up 300 NA
SoftBank, and others
API Holdings Private Limited TPG, Temasek, B Capital, Prosus, Online
Start-up 300 NA
(Pharmeasy) Think Investments, and Kotak PE Pharmacies
Cars24 Services Private Online auto
Alpha Wave Global Start-up 300 9
Limited portals

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 38
Financial services sector continues to be among the preferred sectors for PE/VC
investments but with a changing segment mix
While financial services sector was the largest in terms In the last decade, NBFC was the most preferred sub-
of PE/VC investments over the previous decade, it has sector for PE/VC investments, but off-late the balance
moved to the third spot in 2021 with investments worth has shifted heavily on the side of fintech. Fintech
US$11.7 billion but continues to maintain a strong investments were at an all-time high of US$7.2 billion
growth momentum. PE/VC investments in 2021 were and account for 62% of the investments in the financial
the highest ever for the sector with 118% increase y-o-y. services sector in 2021 vs. 30% in the previous years.
Also, it continues to be the largest sector in terms of This trend is expected to get stronger as more and more
number of deals with 239 deals in 2021, which is also PE/VC funds back financial services companies that
the highest ever for the sector. PE/VC investments in leverage technology to do business, solving real world
financial services sector had declined to US$5.4 billion in problems revolving around distribution, underwriting and
2020, a 40% decline y-o-y due to the spike in uncertainty collection of credit. Another sub-sector that is seeing
caused by the COVID-19 pandemic. some traction is asset/wealth management. With
growing financialization of Indian household savings,
The financial services sector has been one of the most
increasing equity market participation, growing affluence
versatile sectors for alternative investments with direct
among new age entrepreneurs, the wealth/asset
links to the economy, providing a good proxy of the long-
management space is expected to grow significantly in
term India growth story for investors to play on. This
the coming years and PE/VC funds are positioning
sector provides investors varied options across business
themselves to capture a greater share of this growing
models ranging from pure play banks to specialized non-
pie.
banking finance companies (NBFCs), small finance
banks, online credit platforms, insurance companies, and As a result, the trend in financial services sector
payment solution companies. Further, with technology investments has shifted from providing growth capital
becoming a key component of the sector, many new tech for lending institutions to start-up funding of new-age
enabled business models have emerged that are helping tech enabled business models that are disrupting the
increase financial inclusion, increasing the addressable traditional ways of providing financial services.
market for the financial services sector.

Exhibit 63: Trend in investments in financial services sector

70 71 80
4,000 70
60 57
51 60
3,000 46
42 40 39 41 50
38 38
4,287 40
2,000
3,676
30
2,689 2,761 2,728
1,000 2,166 1,958 20
1,767
1,290 1,092 10
877 663
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$8,899 m, #194) (US$5,360 m, #159) (US$11,688 m, #239)
Value (US$m) # of deals

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 39
 Exhibit 64: Top sub-sectors by value(US$m) Exhibit 65: Top sub-sectors by # of deals
2020(US$5,360m) , 2021(US11,688m) 2020(159) , 2021(239)

7,241 156
Fintech Fintech
1,998 89

1,053 19
Asset management NBFC
300 29

946 15
NBFC Micro finance
1,288 6

625 13
HFC HFC
210 5

590 12
Insurance Insurance
164 6

297 Asset 8
Micro finance management 2
45

215 5
Banks Banks
1,071 15

721 11
Others Others
288 5

2020 2021
Source: EY analysis of VCCEdge data
Note: Others includes exchanges, brokerages, advisory services etc.

Exhibit 66: Deal type (US$m) Exhibit 67: Deal type #

2020(US$5,360m) , 2021(US11,688m) 2020(159) , 2021(239)

286 25
Credit investment Credit investment
825 20

1,384 6
Buyout Buyout
1,029 3

928 15
PIPE PIPE
1,436 20

7,258 159
Start-up Start-up
1,399 92

1,831 34
Growth capital Growth capital
671 24

2020 2021
Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 40
Exhibit 68: Top financial services sector investments in 2021

Amount Deal
Company/Asset Investors Sub-sector Stage (US$m) Stake %

Asset
ASK Group Blackstone Buyout 1,000 74
management

Altico Capital India Limited Ares Management NBFC Buyout 380 100

Razorpay Software Private Y Combinator, Alkeon Capital, Lone Pine

Fintech Start-up 375 5
Limited Capital, GIC, Sequoia Capital, Tiger Global

Ribbit Capital, Coatue Management, Insight

Resilient Innovations Venture Management, Sequoia Capital,
Fintech Start-up 370 13
Private Limited (BharatPe) Dragoneer Investment, Tiger Global, and
others

PhonePe Private Limited Walmart, Tencent, and Tiger Global Fintech Start-up 350 NA

One 97 Communications
BlackRock, CPPIB, and GIC Fintech PIPE 338 2
Limited (Paytm)

Matrix Partners, Zodius Technology Fund II,

OFB Tech Private Limited Norwest Venture Partners, SoftBank, Tiger Fintech Start-up 325 7
Global, and others

Moore Capital Management, Lone Pine Growth

Pine Labs Private Limited Fintech 285 1
Capital, Temasek, and others capital

Bitcipher Labs LLP Coinbase Ventures, Tiger Global, Sequoia

Fintech Start-up 260 26
(Coinswitch Kuber) Capital, and Paradigm

Munich Re Ventures, General Atlantic,

Acko Technology and
Multiples PE, CPPIB, and Lightspeed Venture Fintech Start-up 255 23
Services Private Limited
Partners

Steadfast Capital, Lone Pine Capital, Alkeon

NextBillion Technology
Capital Management, Sequoia Capital, Tiger Fintech Start-up 251 8
Private Limited (Groww)
Global, and others

Coatue Management, DST Global, Falcon

Dreamplug Technologies
Edge, Insight Venture, Sofina SA, Tiger Fintech Start-up 251 6
Private Limited (CRED)
Global, and others

Better World Technology

Softbank and others Fintech Start-up 250 17
Private Limited (Zeta)

Five Star Business Finance KKR Global Impact Fund, Sequoia Capital, Growth
NBFC 234 NA
Limited Norwest Venture Partners, and TVS Capital capital

Blume Ventures, Insight Venture

GaragePreneurs Internet
Management, Tiger Global, Moore Capital Fintech Start-up 220 22
Private Limited (Slice)
Management, and others

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 41
Share of infrastructure sector in PE/VC investments declines in 2021
In the previous decade, infrastructure sector was the sub-sector aggregating to US$3.1 billion and
second largest sector behind financial services for PE/VC predominantly in the renewables space (US$2.7 billion)
investments with US$34.9 billion invested across 292 and accounting for 58% of all infrastructure investments
deals. A major surge in PE/VC investments in the sector (25%, US$1.2 billion in 2020) followed by roads and
came in the last three years. However, with easing highways that have accounted for 25% of all
liquidity and falling yields globally post the pandemic, the infrastructure deals by value aggregating to US$955
focus of PE/VC players shifted to growth-oriented e- million (36%, US$1.7 billion in 2020).
commerce and tech-oriented businesses. As a result,
Nonetheless with increasing direct investments by
infrastructure investments in 2021 dropped to the fifth
pension funds and SWFs, emergence of new investment
place with US$5.4 billion recorded across 47 deals, a
vehicles like InvITs, favourable policies from the
modest 12% increase over 2020 (US$4.8 billion across
Government, and a substantial asset monetization
31 deals).
pipeline of large infrastructure assets by the
However, the infrastructure sector continues to see Government as well as corporates, the infrastructure
large deals with five US$500 million+ deals compared to asset class is expected to remain one of the priority
15 such deals in the last decade. In 2021, more than half areas for PE/VC funds to deploy capital.
the deals in the infrastructure sector were in the power

Exhibit 69: Trend in investments in infrastructure sector

20
5,000 16
14
4,000 13 15
12 12
11
10
3,000 9
5,258 8 8 10
6 6
2,000
2,871 2,547 2,796 5
1,000 2,005 1,589 1,807
917 588 513 911 1,100
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$12,681m, #47) (US$4,813 m, #31) (US$5,406 m, #47)
Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 70: Top sub-sectors by value(US$m) Exhibit 71: Top sub-sectors by # of deals
2020(US$4,813m) , 2021(US5,406m) 2020(31) , 2021(47)

Renewables 2,670 Renewables 19

1,212 19

Roads and highways 955 Roads and highways 10

1,742 5

EPC 935 EPC 6

219 2
Power distribution and 306 Power distribution and 4
transmission - transmission -
Traditional power 256 Traditional power 2
generation 566 generation 1

Ports (air and sea) 139 Ports (air and sea) 2

- -

Telecom assets 121 Telecom assets 1

1,022 1
Other utilites (waste, 25 Other utilites (waste, 3
water, oil and gas) 53 water, oil and gas) 3

2020 2021
Source: EY analysis of VCCEdge data
Note: Others includes exchanges, brokerages, advisory services etc.

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 42
 Exhibit 72: Deal type (US$m) Exhibit 73: Deal type #
2020(US$4,813m) , 2021(US5,406m) 2020(31) , 2021(47)

638 7
Credit investment Credit investment
847 7

1,608 10
Buyout Buyout
2,549 11

1,843 8
PIPE PIPE
- 1

286 10
Start-up Start-up
454 8

1,032 12
Growth capital Growth capital
964 4

2020 2021
Source: EY analysis of VCCEdge data

Exhibit 74: Top infrastructure sector investments in 2021

Amount Deal
Company/Asset Investors Sub-sector Stage (US$m) Stake %
IRB Infrastructure Developers
GIC, Ferrovial S.A. EPC PIPE 712 42
Limited
BlackRock, BNP Paribas Energy
ReNew Power Transition Fund, Sylebra Renewables PIPE 610 NA
Capital, and others
Engie SA-Indian Solar Energy Edelweiss Alternative Asset
Renewables Buyout 550 75
Assets Advisors, and others
CPPIB, Ontario Teachers’ Growth
NHAI InvIT Roads and highways 537 50
Pension Plan Board capital
US International Development Credit
First Solar, TN Plant Renewables 500 NA
Finance Corporation (DFC) investment
2 Solar Projects of Fortum
Actis Renewables Buyout 332 100
India
Clean Max Enviro Energy Augment Infrastructure Traditional power
Buyout 222 NA
Solutions Private Limited Partners generation
OMERS Infrastructure
Azure Power Global Limited Renewables PIPE 219 19
Management
Sterlite Power Transmission
Power transmission
Limited, 5 Energy AMP Capital Investors Limited Buyout 150 50
and distribution
Transmission Projects
Growth
IndInfravit Trust CPPIB Roads and highways 135 16
capital
The Norwegian Investment
Fourth Partner Energy Private Growth
Fund for Developing Countries, EPC 125 NA
Limited capital
The Rise Fund
Space Teleinfra. Private
Brookfield's Tower InvIT Telecom assets Buyout 121 100
Limited
Adani Ports and Special
Warburg Pincus Ports PIPE 109 NA
Economic Zone Limited
Power transmission
PowerGrid InvIT CPPIB PIPE 108 NA
and distribution

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 43
Real estate sector records a decline in PE/VC investments due to absence of large
deals in the commercial real estate segment
Real estate sector has seen steady PE/VC investments Despite the pull-back in 2020 and 2021 on account of
over the past five years averaging around US$5 billion. the COVID-19 induced economic slowdown, the real
In 2021, real estate sector recorded US$5.3 billion estate sector is expected to be one of the major drivers
across 72 deals, 6% lower compared to 2020 (US$5.7 of PE/VC investments into India. With the
billion across 43 deals). implementation of GST, proliferation of e-commerce and
social media, adoption of cloud and AI technology,
PE/VC investments in real estate sector were dominated
government initiatives like the PLI scheme and push for
by investments in commercial real estate which
housing for all, and change in consumer lifestyles, the
accounted for 40% of all investments in the sector
next wave of PE/VC real estate investments is expected
aggregating US$2.1 billion. However, investments in the
to be attracted by the growth in warehousing, industrial
commercial real estate segment recorded a 46% y-o-y
parks, affordable housing, student housing and data
decline in the absence of large deals.
centers apart from the commercial office segment which
is expected to continue witnessing steady growth.

Exhibit 75: Trend in investments in real estate sector

30
5,000 24
21 25
4,000 18 19
17 17 16 17 20
15 15
3,000
15
4,530
2,000
6 6 10
2,511
1,000 1,760 5
1,520 1,429 1,287 1,272
833 441 269 416 998
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$6,293m, #76) (US$5,656 m, #43) (US$5,317 m, #72)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 76: Top sub-sectors by value(US$m) Exhibit 77: Top sub-sectors by # of deals
2020(US$5,656m) , 2021(US$5,317m) 2020(43) , 2021(72)

22
2,139 Commercial
Commercial 9
3,944
24
808 Residential
Residential 2
145
8
805 Developers
Developers 11
453

Industrial/Warehousing/D 5
Industrial/Warehousing/ 714
Data center ata center 6
794

312 6
Hospitality Hospitality
99 6

539 7
Others Others
222 9

2020 2021
Source: EY analysis of VCCEdge data
Note: Others includes ancillary services, online brokerages, advisory services etc.

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 44
 Exhibit 78: Deal type (US$m) Exhibit 79: Deal type #
2020(US$5,656m) , 2021(US$5,317m) 2020(43) , 2021(72)

421 13
Credit investment Credit investment
81 2
2,037 19
Buyout Buyout
4,633 12
117 2
PIPE PIPE
275 3
521 12
Start-up Start-up
243 16

2,222 26
Growth capital Growth capital
424 10

2020 2021
Source: EY analysis of VCCEdge data

Exhibit 80: Top real estate sector investments in 2021

Amount Deal
Company/Asset Investors Sub-sector Stage (US$m) Stake %
Embassy Industrial Parks Private
Blackstone Real Estate Partners Commercial Buyout 715 100
Limited

EverYondr (Data Center Project in

Everstone and Yondr Group Data center Buyout 500 50
Mumbai)

RMZ Corp, construction projects Growth

CPPIB Developer 340 NA
JV capital
Others real
Ground Holding Realty (JV with Growth
Kotak Realty Fund estate 272 50
The Guardians Real Estate) capital
services
Others real
NoBroker Technologies Solutions General Atlantic, Tiger Global, and
estate Start-up 210 21
Private Limited Moore Capital Management
services
Phoenix Mills Limited, Investment Growth
GIC Commercial 208 36
Platform capital
Gardencity Realty, 1.65 M sq ft at
Ascendas Property Fund Commercial Buyout 197 100
Bengaluru IT park
Plutocrat Commercial Real Estate Growth
CPPIB Commercial 182 49
Private Limited capital
Credit
Phoenix Tech Zone Private Limited Varde Partners Developer 156 NA
investment
Growth
Phoenix's IT-SEZ,1.1 M sq ft GIC Commercial 143 NA
capital
INDIS, Five Residential Projects in Growth
Brookfield Asset Management Residential 135 NA
South India capital
Indospace (joint venture between
Growth
Joint venture with KSH Infra the Everstone Group, GLP and Warehousing 134 50
capital
Realterm)

Godrej Properties Limited GIC Developer PIPE 110 2

Falcon Edge, Alpha Wave, Matrix Student

Dtwelve Spaces Private Limited Start-up 102 NA
Partners, and Sequoia Capital housing
Kalpataru's 2 Mumbai realty Credit
PAG Residential 100 NA
projects investment

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 45
Life sciences sector has seen a renewed interest
Post the pandemic, there has been a renewed interest in The pharmaceuticals sector saw maximum investments
the life sciences sector with supportive global tailwinds. in the formulations business (64% of total investments)
PE/VC investments in the life sciences sector in 2021 followed by CDMO/CRO businesses and unlike
grew 15% y-o-y to US$4.4 billion after recording a 49% healthcare, the pharmaceuticals sector had growth and
growth in 2020. While PE/VC investments in life sciences buyouts garner major chunk of the investments.
sector in 2020 was dominated by pharmaceuticals (87%
The supply shocks due to COVID-19 have caused many
share), it’s share has declined in 2021 to 51%.
large pharma companies to rethink their global supply
The healthcare sector has seen significant investments chains and diversify sourcing, and India can be a major
into the healthtech space that account for 51% of all beneficiary of this trend. Also, with increasing impetus
investments in 2021 and consequently start-up from the Government through schemes such as PLI we
investments were highest in the healthcare sector. This expect the life sciences sector to be one of the top
was followed by investments in multi-specialty hospital, sectors for PE/VC investments in the coming years.
both standalone and chains.

Exhibit 81: Trend in investments in life sciences sector

43 50

1,200 40
33
26 28
900 24 30
22 20 22
18 19
600 1,307 1,197 1,438
1,115 1,100 1,189 20
1,048
10 821
300 716
16 10
403
174 251
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$2,553 m, #76) (US$3,815 m, #88) (US$4,390 m, #117)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 82: Deal type (US$m) Exhibit 83: Deal type #

2020(US$3,815m) , 2021(US$4,390m) 2020(88) , 2021(US$117)

57 4
Credit investment Credit investment
383 6

764 4
Buyout Buyout
1,897 10

434 12
PIPE PIPE
155 7

1,444 74
Start-up Start-up
358 51

1,692 23
Growth capital Growth capital
1,023 14

2020 2021
Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 46
 Exhibit 84: PE/VC investments in life sciences sector split between pharmaceuticals and
healthcare
100% 39 18 40
185 391 34
90% 249 35
80%
184 527 30
70% 101 714 451
572 25
60% 194
20 24
50% 23 1,082 20
1,158
1,122 14 14
40% 13 15
16 11 866
30% 15
9 9 1,046 9
219 521 10
20% 73 10 476
9 264
6 250 8 8 5
10% 56 7 7
6
4
0% 3 -
2
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
Pharmaceuticals (US$m) Healthcare (US$m)
Number of deals (pharmaceuticals) Number of deals (healthcare)

Source: EY analysis of VCCEdge data

Exhibit 85: Top sub-sectors in Exhibit 86: Top sub-sectors in

pharmaceuticals by value (US$m) pharmaceuticals by # of deals
2020(US$3,325m) , 2021(US$2,307m) 2020(38) , 2021(32)

1,511 13
Formulations Formulations
1,684 15

451 7
CDMO/CRO API/ intermediates
13 12

253 7
API/ intermediates Biotechnology
1,355 7

93 5
Biotechnology CDMO/CRO
272 2

Other Pharmaceuticals Other pharmaceuticals

- 2

2020 2021
Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 47
 Exhibit 87: Top sub-sectors in healtcare Exhibit 88: Top sub-sectors in healtcare
by value (US$m) by # of deals
2020(US$490m) , 2021(US$2,083m) 2020(50) , 2021(85)

1,097 50
Healthtech Healthtech
223 34

Multispeciality 729 9
Unispeciality hospitals
hospitals 82 3

116 Medical devices and 9

Unispeciality hospitals
76 equipments 8

84 8
Diagnostics Diagnostics
63 3

Medical devices and 53 Multispeciality 7

equipments 46 hospitals 2

4 2
Other services Other services
- 0

2020 2021
Source: EY analysis of VCCEdge data

Exhibit 89: Top pharmaceuticals sector investments in 2021

Amount Deal
Company/Asset Investors Sector Stage (US$m) Stake %
Zydus Animal Health and Investments
Multiples, CPPIB Formulations Buyout 400 100
Limited (Zydus AH)
Goldman Sachs (Principal
Aragen Life Sciences Private Limited CDMO/CRO Growth capital 333 33
Investments)
Viyash Life Sciences Private
Limited (integrated generic Carlyle Formulations Start-up 300 NA
pharmaceutical platform)
GMS Holdings Limited,
Stelis Biopharma Private Limited Think Investments, and Formulations Growth capital 195 NA
others

Acme Formulation Private Limited PAG Asia Formulations Buyout 145 NA

Gulf Islamic Investments

Encube Ethicals Private Limited Formulations Growth capital 120 NA
and Quadria
API/
ZCL Chemicals Limited Advent International Buyout 117 51
intermediates

Navitas Inc. H.I.G. Capital CDMO/CRO Buyout 102 75

Corona Remedies Private Limited ChrysCapital Formulations Growth capital 95 27

ADQ Investment
Biocon Biologics Limited Biotechnology Growth capital 76 2
Management

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 48
Exhibit 90: Top healthcare sector investments in 2021

Amount Deal
Company/Asset Investors Sector Stage (US$m) Stake %

Manipal Healthcare Private Multi-speciality Growth

NIIF Strategic Opportunities Fund 286 NA
Limited hospitals capital

Apollo Hospitals Enterprise Multi-speciality

Sands Capital Management PIPE 224 4
Limited hospitals

Carlyle and Brighton Park Capital Growth

Indegene Private Limited Healthtech 200 NA
Management capital

CureFit Healthcare Private

Accel, Temasek, and others Healthtech Start-up 145 10
Limited

Sequoia Capital, Iconiq Capital,

Twin Health Healthtech Start-up 140 NA
Sofina SA, and others

Microsoft's Venture Fund,

Dragoneer Investment, Tiger
Innovaccer Inc. Healthtech Start-up 105 NA
Global, Mubadala, Steadview
Capital, and others

Sequoia Capital, Tiger Global,

GHV Advanced Care Private Multi-speciality
Epiq Capital, Sequoia Capital, Start-up 96 7
Limited hospitals
Trifecta Capital, and others

Creagis, Healthquad Fund,

Boston Ivy Healthcare
Rebright Partners, CDC Group, Healthtech Start-up 75 NA
Solutions Private Limited
and others

Leapfrog Investments, Chiratae

HealthifyMe Wellness Products
Ventures, Inventus Capital Healthtech Start-up 75 NA
and Services Private Limited
Partners, and others

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 49
Media and entertainment sector sees unprecedented interest from PE/VC investors

With reduction in social interactions during covid million, over US$1.2 billion invested in Fantasy sports
restrictions there was increased activity in online media platform Dream11 in two funding rounds by a group of
platforms and entertainment platforms. Customer PE/VC investors and over US$900 million invested in
engagement increased on platforms like short video short content (video, music, pictures etc) sharing social
apps, gaming platforms, sporting entertainment, networking platform Sharechat in multiple rounds.
streaming media etc. As a result, media and
entertainment sector recorded a flourish of PE/VC As media consumption become more personalized and
investments in 2021 of US$4.9 billion which is almost moves to handheld/personal devices, this trend is
equal to the total investments received by the sector in expected to further accelerate and see the emergence of
the previous 10 years. new platforms with varied aggregation, content,
customer segmentation, and monetization models.
2021 saw some unique deals like CVC’s purchase of the
IPL franchise for Ahmedabad at a total value of US$749

Exhibit 91: Trend in investments in media and entertainment sector

3,000 30
24 24
22 22 25

2,000 17 20
15
14
13 13 13 15
12
11
2,470
1,000 10

1,175 5
729 572
201 198 138 329 21 51 513 144
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$866 m, #63) (US$730 m, #61) (US$4,947 m, #76)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 92: Deal type (US$m) Exhibit 93: Deal type #

2020(US$730m) , 2021(US$4,947m) 2020(61) , 2021(76)

5 2
Credit investment Credit investment
60 2

749 3
Buyout Buyout

156 3
PIPE PIPE
9 1

1,813 58
Start-up Start-up
303 54

2,223 10
Growth capital Growth capital
358 4

2020 2021
Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 50
Exhibit 94: Top media and entertainment sector investments in 2021

Amount Deal
Company/Asset Investors Sub-sector Stage (US$m) Stake %

Dream Sports Fields Private Falcon Edge, DST Global, D1 Capital, Growth
Online gaming 840 11
Limited Tiger Global, TPG Capital, and others capital

Irelia Company Pte Limited (CVC Capital Gaming and

IPL franchise for Ahmedabad Buyout 749 100
Partners) sports

Mohalla Tech Private Limited India Quotient Fund, Lightspeed, Twitter Online media
Start-up 502 NA
(Sharechat) Ventures, Tiger Global, and Snap Inc. services

Verse Innovation Private Online Growth

QIA, B Capital, Sofina, Carlyle, and others 450 NA
Limited (Dailyhunt) publishing capital

Steadview Capital, Tiger Global, TPG,

Sporta Technologies Private Growth
ChrysCapital, D1 Capital, Falcon Edge, Online gaming 400 NA
Limited (Dream11) capital
and others

Mohalla Tech Private Limited Alkeon Capital, Temasek, HarbourVest Online media
Start-up 266 7
(Sharechat) Partners LLC, Moore Capital, and others services

Girnar Software Private Leapfrog Investments, Mirae Asset, Online Growth

250 17
Limited (Kheldekho) Sequoia Capital, and others publishing capital

Galactus Funware Technology

Go Ventures, Sequoia Capital, Moore
Private Limited (Mobile Online gaming Start-up 150 7
Capital, and others
Premier League)

Mohalla Tech Private Limited Online media

Mirae Asset, Temasek, and others Start-up 145 5
(Sharechat) services

Online media
Hubilo Softech Private Limited Alkeon Capital and Lightspeed Start-up 125 NA
services

Abu Dhabi Investment Authority, GIC, and Music

Saregama India Limited PIPE 101 10
Quebec Deposit and Investment Fund streaming

Accel India, Norwest Venture Partners, Advertising

Amagi Media Labs Private Growth
and PI Opportunities Fund I (Premji and marketing 100 NA
Limited capital
Invest) services

Verse Innovation Private Online Growth

QIA, Glade Brook, and others 100 NA
Limited (Dailyhunt) publishing capital

Galactus Funware Technology

Composite Capital Management, Moore
Private Limited (Mobile Online gaming Start-up 95 NA
Capital, Go Ventures, and others
Premier League)

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 51
Education sector sees growing PE/VC interest amidst disruption in the business
model
Traditional modes of pedagogy have witnessed a sea These disruptions have revolutionized the various
change both in delivery and consumption. Increasing business models in the education sector across segments
internet and smartphone penetration, high data speeds, like training, tuitions, competitive exam preparation,
and low cost of data coupled with emergence of online upskilling etc.
education platforms has democratized access to
As a result, PE/VC investments in the education sector
education. Further, creativity in creation of educational
have recorded a sharp increase in 2021 (US$3.8 billion)
content enabled by technology has ensured students
of 78% on the back of 169% (US$2.1 billion) y-o-y
have a plethora of choices for learning. The confluence
increase recorded in 2020. The total PE/VC investments
of different technology advances has brought teaching
in the education sector in 2020 and 2021 of US$5.9
and learning from inside the traditional classroom setup
billion are almost two times the investments in the
into the personal space of individual students.
education sector in all prior years combined.

Exhibit 95: Trend in investments in education sector

2,000 35
29
26 30
24
25
19 18
16 17 20
1,000 15
13 1,842
11 15
10
8
1,130 10
607 656 720 5
550 545
86 72 20 64 370
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$786 m, #44) (US$2,114 m, #74) (US$3,763 m, #88)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 96: Deal type (US$m) Exhibit 97: Deal type #

2020(US$2,114m) , 2021(US$3,763m) 2020(74) , 2021(88)

2 1
Credit investment Credit investment
9 3

250 1
Buyout Buyout

PIPE PIPE

1,909 77
Start-up Start-up
878 62

1,602 9
Growth capital Growth capital
1,226 9

2020 2021
Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 52
Exhibit 98: Top education sector investments in 2021

Amount Deal
Stage
Company/Asset Investors (US$m) Stake %

Eruditus Learning Solutions Pte. CPPIB, Accel India, SoftBank, Prosus Ventures, Growth
650 20
Limited Sequoia Capital, and others capital

Think and Learn Private Limited B Capital, Baron Global Advantage Fund, and Growth
460 NA
(BYJU's) others capital

Sorting Hat Technologies Private Tiger Global, General Atlantic, SoftBank,

Start-up 440 13
Limited (Unacademy) Temasek, and others

Think and Learn Private Limited Growth

UBS, Blackstone, ADQ, and others 400 2
(BYJU's) capital

Think and Learn Private Limited Oxshott Venture Fund, Edelweiss, IIFL, Veriton
Start-up 296 2
(BYJU's) Fund, and others

Simplilearn Solutions Private

Blackstone Buyout 250 70
Limited

Think and Learn Private Limited

Asmaan Ventures, Mirae Asset, and ARK Ncore Start-up 150 1
(BYJU's)

UpGrad Education Private Limited Unilazer Ventures and Temasek Start-up 129 NA

Vedantu Innovations Private Westbridge Capital, Coatue Management, and

Start-up 100 10
Limited Tiger Global

Teachmint Technologies Private Better Inc., Lightspeed, Learn Capital, and Epiq
Start-up 78 16
Limited Capital

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 53
4 Exits – at an all-time high
P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 54
Exits – at an all-time high
After reaching a six-year low of US$6 billion in 2020, 1. Acquisition of start-ups by corporates – For e.g.,
exits in 2021 have scaled a high of US$43.2 billion, Tata –Bigbasket
which is more than seven times the value recorded last
2. Large sized secondary deals between buyout funds –
year.
Hexaware (Baring PE Asia- Carlyle), VFS Global
This large exits tally was driven by mega exit deals via (EQT-Blackstone), Encora (Warburg-Advent)
sale to strategics and secondary deals among PE/VC
3. SPAC listing of an Indian company –ReNew Power
funds. This was further augmented by the all-time high
lists on the NASDAQ via a merger with RMG
number of PE-backed IPOs that was spurred by buoyant
Acquisition Corp. II, a blank cheque special purpose
capital markets that saw exuberance among institutional
acquisition company (SPAC)
investors across FIIs and DIIs as well historic
participation from retail investors in PE backed IPOs. 4. IPOs from new-age start-ups - Zomato, Nykaa,
Policybazaar, Cartrade, FinoPay, Paytm etc.
In addition to recording all-time high numbers across exit
types, 2021 also recorded some new trends in the Indian
market.

Exhibit 99: Trend in PE/VC exits

90 100
16,000 90
71 80
63 70
12,000 57
60
43 46
40 38 37 40 50
8,000 36 17,481
28 40
11,406 30
9,592
4,000 20
3,960 4,772 10
1,192 2,709 3,309 1,895 1,060 655 2,347
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$11,170 m, #157) (US$5,957 m, #151) (US$43,252 m, #281)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

These new themes indicate a rise of new set of buyers sections we review the trends in different exit segments
across segments of India’s exit market. In the following for 2021.

Exhibit 100: Exit type (US$m) Exhibit 101: Exit type #

2020(US$5,957m) , 2021(US$43,252m) 2020(151) , 2021(281)

632 8
Buyback Buyback
404 11

6,089 79
Open market Open Market
2,391 66

5,169 44
IPO IPO
1,223 10

16,920 94
Strategic Secondary
1,026 44

14,442 56
Secondary Strategic
913 20

2020 2021
Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 55
Exhibit 102: Top exits in 2021

Amount Deal
Company/Asset Sellers Investors Sector Exit Type (US$m) Stake %

GlobalLogic Inc. CPPIB, Partners Group Hitachi Technology Strategic 8,640 90

Hexaware
Technologies Baring PE Asia Carlyle Technology Secondary 3,000 100
Limited

General Atlantic, TA
IndiaIdeas.com Associates, Temasek,
PayU (Prosus NV) Financial services Strategic 2,876 61
Limited (Billdesk) Visa, March Capital, and
Clearstone Venture

(BCP VIII and BCP

Mphasis Limited BCP VI Asia), ADIA, UC Technology Secondary ~2,800 56
Invest, GIC

VFS Global
Business and
Services Private EQT VII fund Blackstone Secondary 1,870 75
professional services
Limited

Adani Green
SB Energy
Softbank Energy Limited Power and utilities Strategic 1,760 80
Holding
(AGEL)

Encora Warburg Pincus Advent Technology Secondary 1,500 80

BigBasket Alibaba, IFC, and Abraaj TATA Group E-commerce Strategic 1,000 50

Baring Private
SPI Global Partners Group Technology Secondary 800 100
Equity Asia

Atria
Convergence TA Associates, True
Partners Group AG Telecommunications Secondary ~800 75
Technologies North
Limited

Source: EY analysis of VCCEdge data

Strategic exits
Exits via sale to strategics were the highest in 2021 at In 2021, international buyers accounted for a larger
US$16.9 billion, 16.5 times the value recorded in 2020 share of strategic buyers in terms of value (70%) but in
and second highest value of strategic exits ever. The terms of volume domestic buyers accounted for a larger
previous high was in 2018 of US$18.4 billion on account share (74%).
of the large Flipkart-Walmart deal of US$16 billion. In
The largest outbound deal saw Hitachi acquire Global
terms of numbers, strategic deals in 2021 were the
Logic, giving an exit worth US$8.6 billion to CPPIB and
highest ever at 94 deals (44 deals in 2020). Strategic
Partners Group for their 90% stake. The largest strategic
exits accounted for 39% of all exit deals by value and
exit in the domestic space saw Adani Green Energy
33% by volume in 2021.
Limited (AGEL) buyout Softbank’s 80% stake in SB
Technology sector was at the top with US$8.7 billion Energy for US$1.8 billion.
recorded across 23 exits mainly on account of the large
With the global economy recovering from the lows of
US$8.6 billion exit from Global Logic by CPPIB and
COVID, many firms are looking to supplement their
Partners Group via a sale to Hitachi, followed by financial
growth through acquisitions. Further, larger and
services sector with US$3.1 billion recorded across eight
stronger players are using the current opportunity to
exit deals. E-commerce and the renewables sector too
consolidate their position by acquiring weaker players at
recorded strategic exits worth over US$1 billion across
cheap valuations. Many PE/VCs too are focusing on
nine and two deals respectively. This is quite significant
creating platform plays and making bolt-on acquisitions
when compared to previous years when there have been
through their portfolio companies. All these factors are
just four instances in the past 10 years of any sector
expected to further add to the value and number of
recording exits worth more than a billion dollars.
strategic exits in the coming years.

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 56
 Exhibit 103: Trend in strategic exits
32 33 35

30

8,000 25
18 19
20
14 13 13 13 10,875
12 15
4,000 10 9
6 10
3,965
5
186 1,115 174 468 397 2 26 601 1,853 226
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$1,942 m, #55) (US$1,026 m, #44) (US$16,920 m, #93)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 104: Split by location of buyer Exhibit 105: Split by location of buyer (#
(US$m) - 2021(US$16,920m) of deals) - 2021(281)

5,017 , 24 , 26%
30%

11,903 ,
70% 70 , 74%

Domestic International
Source: EY analysis of VCCEdge data

Exhibit 106: Split by sector (US$m) - Exhibit 107: Split by sector (# of deals) -
2021(US$16,920m) 2021(281)
300, 2%
402 , 3% 354 , 2%
553 , 3%

24 , 26% 23 , 24%
1,010 , 6%

2,521 , 15% 4 , 4%
8,690 , 51% 12 , 13%
5 , 5%
3,090 , 18%
8 , 8%
9 , 10%
9 , 10%

Technology Technology
Financial services Education
Infrastructure E-commerce
E-commerce Media and entertainment
Education Financial services
Real estate Business and professional services
Logistics Healthcare
Others Others

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 57
Exhibit 108: Top strategic exits in 2021

Amount Deal
Company/Asset Sellers Investors Sector (US$m) Stake %

GlobalLogic Inc. CPPIB, Partners Group Hitachi Technology 8,640 90

General Atlantic, TA
IndiaIdeas.com Limited Associates, Temasek, Visa, Financial
PayU (Prosus NV) 2,876 61
(Billdesk) March Capital, and services
Clearstone Venture

Adani Green Energy Power and

SB Energy Holding Softbank 1,760 80
Limited (AGEL) utilities

BigBasket Alibaba, IFC, and Abraaj TATA Group E-commerce 1,000 50

Adani Ports and

Gangavaram Port Limited Warburg Pincus Special Economic Infrastructure 761 32
Zone Limited

Think and Learn

Aakash Educational Services
Blackstone Private Limited Education 375 38
Limited
(BYJU’s)

Tata Realty &

Intellion Square in Mumbai Actis Infrastructure Real estate 312 26
Limited

Spoton Logistics Private Samara Capital, Xponentia, Delhivery Private

Logistics 300 100
Limited and others Limited

Aon India Insurance Brokers Financial

Catamaran Ventures Aon 180 51
Private Limited services

Eight Roads Ventures, Think and Learn

Toppr Technologies Private
Elevation Capital, and Helion Private Limited Education 150 100
Limited
Venture Partners (BYJU’s)

Source: EY analysis of VCCEdge data

Secondary exits
Secondary exits in 2021 have been the highest ever both complete exit given the size of their holding. As a result,
in terms of value and volume recording US$14.4 billion there were many secondary deals between large buyout
across 56 deals, which is more than the total value of funds.
secondary exits in the previous five years combined.
This created a win-win situation for both buyers and
Secondary exits accounted for 33% of all exits by value
sellers. The buyer got to deploy large sums of capital in a
and 20% by volume in 2021.
single transaction as many global funds look to
As a result of the COVID-19 pandemic in 2020, the deal significantly increase their India allocations. Similarly,
velocity in secondary transactions had declined sellers got to return capital + returns to their LP’s,
significantly as funds decided to focus on supporting thereby laying the foundation for bigger rounds in future
their current portfolio companies to tide over the fundraises.
difficult times with top-up funding/bridge funding.
In terms of value, technology sector has accounted for
With high global liquidity and low interest rates lifting 54% (US$7.8 billion) of all secondary exits by value in
valuations across public and private markets alike, many 2021 primarily due to few large deals. Next in line was
PE/VC funds sitting on older vintage investments used business and professional services at US$1.9 billion due
this opportunity to exit long held positions at reasonably to a single large deal which involved Blackstone
good valuations. acquiring 75% stake in VFS Global from EQT. Financial
services with US916 million and e-commerce with
Further, with many companies choosing the IPO route to
US$899 million were next in line.
raise funding, large PE investors were actively looking
for secondary deals especially in situations where In terms of number of deals, e-commerce recorded
financial sponsors hold majority control and where an maximum secondary deals (13 deals) followed by
IPO, though lucrative, is not a viable option for a technology and healthcare with six deals each.

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 58
 Exhibit 109: Trend in secondary exits

16 16 18
15 16
6,000
14

10 12
4,000 9 9 9 10
8
7 6,456 8
6
6
2,000 3,616
3 3,442 4
2
1,218 2
445 183 619 25 20 34 834 928
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$2,465 m, #34) (US$913 m, #20) (US$14,442 m, #56)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

Exhibit 110: Split by sector (US$m) - Exhibit 111: Split by sector (# of deals) -
2021(US$14,442m) 2021(56)

324, 2%
1,305 , 9%

529 , 4% 13 , 23%
800 , 6% 17 , 31%
899 , 6%
7,800 , 54% 6 , 11%
916 , 6%
3 , 5%
1,870 , 13% 3 , 5% 6 , 11%
4 , 7%
4 , 7%

Technology E-commerce
Financial services Technology
Infrastructure Financial services
E-commerce Media and entertainment
Infrastructure Retail and consumer products
Education Real estate
Real estate Healthcare
Others Others

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 59
Exhibit 112: Top secondary exits in 2021

Amount Deal
Company/Asset Sellers Investors Sector (US$m) Stake %

Hexaware Technologies
Baring PE Asia Carlyle Technology 3,000 100
Limited

(BCP VIII and BCP

Mphasis Limited BCP VI Asia), ADIA, UC Technology 2,800 56
Invest, GIC

VFS Global Services Business and

EQT VII fund Blackstone 1,870 75
Private Limited professional services

Encora Warburg Pincus Advent International Technology 1,500 80

Atria Convergence
TA Associates, True North Partners Group AG Telecommunications 800 NA
Technologies Limited

Baring Private Equity

SPI Global Partners Group Technology 800 100
Asia

ASK Group Advent International Blackstone Financial services 541 40

Warburg Pincus, Embassy

Embassy Industrial Parks Blackstone Real
Property Developments Real estate 501 70
Private Limited Estate Partners
Private Limited

ANI Technologies Private Tiger Global and Matrix Temasek and

E-commerce 500 NA
Limited (Ola) Partners Warburg Pincus

Infogain Co. ChrysCapital Apax Partners Technology 500 63

Source: EY analysis of VCCEdge data

Open market exits

Open market exits have been a mainstay for PE/VC exits From a sector perspective, financial services was the
in India over the past decade and expected to be one of largest sector for open market exits with US$3.6 billion
the major avenues for exit considering there were large realized across 25 exit deals and accounting for 59% of
number of PE-backed IPOs in 2021 where PE/VC funds all open market exits by value in 2021. Next in line were
continue to hold sizeable stakes even after the IPOs. In technology (US$787 million), retail and consumer
2021, open market exits recorded US$6.1 billion, products (US$473 million) and healthcare (US$398
second highest after US$6.2 billion recorded in 2017. million).

Exhibit 113: Trend in open market exits

3,000 28 30

22 25
21
2,000 17 17 20
16
15
13 1,874 13 15
12
10 10 2,556
1,000 2,188 10

1,080 945 1,069 5

792
519 410 566 470 590
- -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$4,579 m, #49) (US$2,391 m, #66) (US$6,089 m, #79)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 60
 Exhibit 114: Split by sector (US$m) - Exhibit 115: Split by sector (# of deals) -
2021(US$6,089m) 2021(79)
349 , 6%
98, 2%
104 , 2%
14 , 18%
276 , 4%
25 , 32%
398 , 6% 4 , 5%
473 , 8% 4 , 5%
3,605 , 59%
5 , 6%
787 , 13%
10 , 13%
8 , 10%
9 , 11%

Financial services Financial services

Technology Retail and consumer products
Retail and consumer products Technology
Healthcare Industrial products
Real estate Pharmaceuticals
Logistics Chemicals
Pharmaceuticals Media and entertainment
Others Others

Source: EY analysis of VCCEdge data

Exhibit 116: Top open market exits in 2021

Amount Deal
Company/Asset Sellers Sector Sector (US$m) Stake %

SBI Cards and Payment Services

Carlyle Financial services 649 5
Limited June 2022

SBI Cards and Payment Services

Carlyle Financial services 542 4
Limited March 2022

SBI Life Insurance Company

Carlyle Financial services 531 4
Limited May 2022

SBI Cards and Payment Services

Carlyle Financial services 443 3
Limited September 2022

Max Healthcare Institute Limited KKR Healthcare 398 9

September 2022

SBI Life Insurance Company

CPPIB Financial services 367 2
Limited September 2022

SBI Life Insurance Company

Carlyle Financial services 290 2
Limited August 2022

Embassy Office Parks REIT Blackstone Real estate 275 6

September 2022

Baring Asia Private

Coforge Limited Technology 221 8
Equity May 2022

Baring Asia Private

Coforge Limited Technology 214 6
Equity August 2022

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 61
IPO exits
IPO as a mode of exit has been quite cyclical, changing in looking to go public, the pipeline of IPO bound start-ups
line with the performance of major equity indices. 2021 was quite long at the end of 2021. However, with
has been a good year for PE-backed IPOs in India, tightening of liquidity, uncertainty caused by geo-
recording an all-time high of 44 PE/VC backed IPOs. In political events, and sharp correction in some recently
2021, PE/VC backed IPOs have raised US$13.1 billion, listed start-ups in the initial months of 2022, the
highest value raised by PE-backed IPOs. In 2021, PE- sentiment for IPOs from start-ups and other companies
backed IPOs accounted for 67% of all IPOs in 2021 and has dampened to an extent.
76% of all IPO proceeds. IPOs in 2021 provided a major
ReNew Power listed on the NASDAQ in August 2021
liquidity event for PE/VC funds who garnered US$5.1
through a merger with RMG Acquisition Corp. II, a blank
billion in the offer-for-sale component of these IPOs.
cheque SPAC, the first ever SPAC listing by an Indian
Financial services and consumer sectors remain the top company. This potentially opens a new fundraising route
sectors for PE/VC-backed listings. In 2021, financial for Indian companies as well as an additional exit avenue
services sector is at the top with seven IPOs followed by for early investors.
automotive, e-commerce and food and agriculture with
Among PE/VC funds, Sequoia had the maximum number
four IPOs each. A new trend amongst this year’s listings
of portfolio companies that IPO’d (5 IPOs) which include
were IPOs from new-age start-ups, overseas listing and
Indigo Paints, Stove Craft, Craftsman Automation, Go
listing via the SPAC route.
Fashion and Zomato, followed by Temasek, TPG and
With listings of start-ups like Nykaa, Policybazaar, Warburg with three PortCo IPOs each.
Paytm, Cartrade, FinoPay etc. and other unicorns

Exhibit 117: Trend in PE-backed IPO exits

15 15 16

14
2,000
11 12

10

8
2,321
1,000 6
4 4
3 3 3 1,444
4
2 2 1,000
1 2
461 944
- 257 90 - 93 28 102
- 1 -
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2019 2020 2021
(US$347 m, #10) (US$1,223 m, #10) (US$5,169 m, #44)

Value (US$m) # of deals

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 62
 Exhibit 118: Split by sector (US$m) - Exhibit 119: Split by sector (# of deals) -
2021(US$5,169m) 2021(44)

753 , 15% 7 , 16%

179, 3%
1,665 , 32% 16 , 36%
249 , 5% 4 , 9%
262 , 5%
4 , 9%
506 , 10%
923 , 18% 3 , 7% 4 , 9%
632 , 12% 3 , 7%
3 , 7%

Financial services Financial services

Automotive E-commerce
E-commerce Automotive
Healthcare Food and agriculture
Industrial products Pharmaceuticals
Food and agriculture Retail and consumer products
Pharmaceuticals Healthcare
Others Others

Source: EY analysis of VCCEdge data

Exhibit 120: Top PE-backed IPO exits in 2021

Amount Deal
Company Sellers Sector (US$m) Stake %

Sona BLW Precision Forgings Limited Blackstone Automotive 719 33

SAIF Partners, Elevation Capital, Financial

One 97 Communications Limited (Paytm) 499 3
Softbank, and others services

WestBridge, Apis Growth, and Financial

Star Health and Allied Insurance Co. Limited 481 7
others services

Temasek, Warburg, and March

Cartrade Tech Limited E-commerce 378 38
Capital

Westbridge, Granite Hill, and Financial

Aptus Value Housing Finance India Limited 291 12
Madison India Opportunities services

Financial
PB Fintech Private Limited (Policybazaar) Softbank 252 4
services

Vijaya Diagnostic Centre Limited Karakoram and Kedaara Capital Healthcare 221 30

Krishna Institute of Medical Sciences

General Atlantic Healthcare 177 20
Limited

PI Opportunities and Warburg

MedPlus Health Services Limited Pharmaceuticals 155 13
Pincus

FSN E-Commerce Ventures Private Limited

TPG Growth, Lighthouse E-commerce 151 2
(Nykaa)

Source: EY analysis of VCCEdge data

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 63
Exhibit 121: Top PE/VC funds in 2021 in terms of number of IPO listings

Issuer Company Number of IPOs Investees

Sequoia 5 Indigo Paints, Stove Craft, Go Fashion, Craftsman Automation and Zomato

Temasek 3 Zomato, Devyani International (Pizza Hut), and Cartrade

Warburg 3 Kalyan Jewellers, Medplus and Cartrade

TPG 3 Nykaa, Dodla Dairy, and Shriram Properties

Exhibit 122: IPO pipeline

Company name PE/VC investor Sector

Aadhar Housing Finance Limited Blackstone Financial services

Eightroads, CDPQ, Temasek, Tiger Global, TPG, Orbimed, ADQ,

API Holdings Limited (PharmEasy) E-commerce
Blackstone and others

ASK Investment Managers Limited Blackstone Financial services

Crystal Crop Protection Limited Everstone Capital Chemicals

Delhivery Limited Carlyle, CPPIB, GIC, Nexus, Softbank, Tiger Global, and Steadview Logistics

Five Star Business Finance Limited KKR, Matrix, Norwest, Sequoia, TPG, and TVS Capital Financial services

Fusion Micro Finance Limited Warburg Pincus Financial services

Global Health Limited (Medanta) Carlyle and Temasek Healthcare

Healthium Medtech Limited Apax Partners Healthcare

Oravel Stays Limited (OYO) Eightroads, Sequoia, Softbank, and Lightspeed E-commerce

Sahajanand Medical Technologies

Samara Capital and Morgan Stanley Healthcare
Limited

Seven Islands Shipping Limited Fairfax and Wayzata Logistics

Vectus Industries Limited Creador Industrial products

Source: SEBI and VCCEdge

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 64
P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 65
5 Trends in add-on/bolt-on
deals by PE/VC investees
Page 66
P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2
Trends in add-on/bolt-on deals by PE/VC investees
While the PE/VC investment activity has been on a roll by PE funds with an inorganic growth thesis. Add-
over the past few years, another underlying theme that on/bolt-on investments have been on an accelerated
has been playing out is the add-on/bolt-on investments growth trajectory, growing more than 10-fold from less
made by PE/VC-funded companies. US$1 billion in 2015 to US$10.8 billion in 2021. Add-
on/bolt-on deals are at an all-time high in 2021, more
Since 2015 we have witnessed US$27.4 billion invested
than twice the value and numbers recorded in 2020.
by PE/VC-funded companies or special platforms set-up

Exhibit 123: Trend in add-on/bolt-on deals by PE/VC investees

12,000 149 160

140
10,000
120
8,000
85 85 100
81 78
71 74
6,000 80
10,830
60
4,000
40
2,000 4,632
3,774 20
2,268 2,876
2,107
- 883 0
2015 2016 2017 2018 2019 2020 2021

Value Count

Source: EY analysis of data from Mergermarket, Thomson, Bloomberg, and news reports

Consolidating market share, adding new capabilities, A platform company usually has the following
enhancing areas of growth, access to new characteristics:
geographies/markets/customer segments, and
► Has a strong, experienced management team with a
vertical/horizontal integration have been some of the
proven track record of growth;
key drivers behind the add-on/bolt-on deal activity
undertaken by most PE/VC-funded companies that ► Is usually a top player in a well-defined and growing
benefit from the strong PE/VC backing even when not niche market; and
having positive cashflow from operations.
► Is a larger company with defined systems and
In addition, many PE-funds are also adopting a buy and standard operating procedures (SOP) that match the
build strategy by setting-up platforms for specific investment criteria of the private equity firm.
themes, thereby having greater control on the strategy
Off-late there have been platforms set-up in the
and growth trajectory of the business. A platform
renewables, pharma, EV and technology sectors.
company is the initial acquisition made by a PE/VC fund
in a specific industry or investment type which serves as The spate of add-on/bolt-on deals has increased
the foundation for roll-up of other companies acquired in tremendously in the last three years with many well-
the same industry. Some private equity firms acquire funded companies taking the opportunity to consolidate
two to three platform companies for each fund, and then their market share or add capabilities at significantly
grow these platform companies both organically and lower valuations.
through acquisition.
On an average PE/VC funded companies did two add-
on/bolt-on deals with a few exceptions that have done
more than 10 deals, sometimes even 2-3 deals in a
single year. The most notable among these include
ReNew Power, BYJU’s, Paytm, Zomato, Quikr, Cardekho
and Nazara.

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 67
 Exhibit 124: Frequency distribution of add-on/bolt-on acquisitions by PE/VC investees
164
2015-2021

Mean Median Mode

2 1 1
Dailyhunt
53 Ola
MyGlamm Snapdeal Cardekho Cube Highways
MakeMyTrip OYO Nazara Paytm Zomato

28 Freshdesk
Indiagrid
CLP Unacademy Quikr BYJU’s ReNew
11 11
4 3 2 2 2
1 1 1 1 1

1 2 3 4 5 6 7 8 9 10 11 12 15 18 19

Source: EY analysis of data from Mergermarket, Thomson, Bloomberg, and news reports

Exhibit 125: Add-on/bolt-on deals 2015- Exhibit 126: Add-on/bolt-on deals 2015-
2021 – split by sectors (value US$m) 2021 – split by sectors (number of deals)

2,904 ,
1,224 10% 106 ,
, 4% 7,124 , 17%
2,127 26% 213 ,
, 8% 34%
75 ,
2,262 12%
, 8%
4,956 , 49
2,891 , 42 , 8%
10% 18% 48
, 7% 45
4,301 , 45 , , 8%
16% , 7% 7%

Infrastructure Technology
Financial services Infrastructure
Real estate Healthcare
Education Media and entertainment
E-commerce Real estate
Healthcare Business and professional services
Telecommunications Financial services
Others Others

Source: EY analysis of data from Mergermarket, Thomson, Bloomberg and news reports

From a sector perspective, the highest add-on/bolt-on The next largest sector in terms of value of add-on/bolt-
deals in terms of value have happened in the on deals was real estate (US$4.3 billion). Off-late,
infrastructure sector worth US$7.1 billion, primarily education sector has recorded a flurry of large deals
driven by consolidation in the renewables sector. This recording US$2.9 billion in the last two years, mainly on
was followed by financial services sector worth US$5 account of the mega acquisitions done by BYJU’s.
billion which was driven by consolidation as well as e-
In terms of number of deals, maximum add-on/bolt-on
commerce businesses acquiring payment/fintech
deals have happened in the technology sector (106
capabilities to facilitate ease of transactions for their
deals), followed by infrastructure (75 deals), healthcare
core business.
(49 deals), and media and entertainment (48 deals).

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 68
Exhibit 127: Top add-on/bolt-on deals in 2015-2021

Amount
Company Sector Buyer PE Fund Year (US$m) Stake%
IndiaIdeas.com Limited TA Associates, General
Financial services PayU (Prosus NV) 2021 4,700 100
(Billdesk) Atlantic
Ostro Energy Private Goldman Sachs, GEF
Power and utilities ReNew Power 2018 1,663 100
Limited Capital, ADIA, and CPPIB
Embassy Office Ventures Embassy Office
Private Limited/Embassy Real estate Parks Real Estate Blackstone RE 2020 1,314 NA
Tech Village Investment Trust
ibibo Group Private Helion Ventures and Tiger
E-commerce MakeMyTrip 2016 1,274 100
Limited Global
Sequoia, Lightspeed
Aakash Educational Venture, General Atlantic,
Education BYJU’s 2021 1,000 NA
Services Limited Prosus Ventures, and
Tencent
Nine TOT projects of
Infrastructure Cube Highways I Squared and IFC 2019 716 100
NHAI
NER II Transmission
Power and utilities India Grid Trust GIC and KKR 2021 636 100
Limited
Idea Cellular ATC Telecom
Infrastructure Services Telecommunications Infrastructure IDFC and Macquarie 2017 614 100
Limited Private Limited
Sequoia, Lightspeed
Great Learning Education Venture, General Atlantic,
Education BYJU’s 2021 600 100
Pte Limited Prosus Ventures, and
Tencent
Two existing malls and an Virtuous Retail
upcoming retail Real estate Services Private Xander 2019 550 100
development project Limited

Source: EY analysis of data from Mergermarket, Thomson, Bloomberg, and news reports

Exhibit 128: Illustrative list of platforms set-up by PE funds in recent years

Fund Platform Sector About the Platform

Platform to invest in retail assets - AlphaOne, L&T’s Seawoods
Blackstone Nexus Malls Real estate
mall are some of its recent investments
A JV with Embassy Group to invest in/develop commercial
Embassy Office Parks Real estate
assets
Brookfield Renewable
Brookfield Renewable energy TerraForm Global. It is scouting for green energy assets in India
Energy Partners
A platform to consolidate other pharma intermediates, API and
Carlyle Viyash Life Sciences Pharmaceuticals formulation assets to create an integrated offering for large
generics customers
Industrial
CDPQ Logos India A platform to invest in/develop industrial warehouses
warehousing
A JV with Phoenix Group to invest in/develop commercial assets
CPPIB Island Star City Mall Real estate
focused on retail sector
A JV with Lightsource BP to jointly manage funds focused on
Green energy
Everstone EverSource Capital contracted power, distribution infrastructure and energy
platform
services in India
Industrial A platform to invest in/develop industrial warehouses. CPPIB has
Indospace
warehousing also come in as a co-investor in this platform
Business Has invested in Monster.com, Heptagon Technologies Private
Fairbridge Quess Corp
services/ITES Limited, Comtel Solutions, Manipal Integrated Services etc.
Goldman Owns over 2GW of renewable energy assets. CPPIB has also
ReNew Power Ventures Renewable energy
Sachs come in as a co-investor in this platform

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 69
Fund Platform Sector About the Platform
A platform focused on development, acquisition and ownership
Samhi Hotels (Exited) Hotels
of branded hotels located in prime markets throughout India
I Squared
Cube Highway Infrastructure A JV with IFC to invest in road assets
Capital
Asian media platform that has invested in Global Sports
Media and
KKR Emerald Media Commerce, Cosmos-Maya (exited), Amagi Media (exited), Yupp
entertainment
TV, Endemol Shine India, OML, Graphic India, Net Mediatama
A platform investing in hospital assets -Radiant’s facilities
Radiant Life Care (Max include BLK Super Specialty Hospital in New Delhi and the
Renewable energy
Healthcare) Nanavati Super Specialty Hospital in Mumbai. It has recently
merged with Max Healthcare
A platform to invest in a diversified portfolio of operational
Virescent Renewables renewable energy assets, facilitated by investments
predominantly made through KKR’s infrastructure fund
A US$3 billion platform to invest in ports, terminals,
NIIF-DP
Hindustan Infralog Infrastructure transportation and logistics businesses in India. They recently
World
acquired Continental Warehousing
Investments by the platform include Rhea Healthcare, Cancer
TPG Asia Healthcare Healthcare Treatment Services International, Nova IVF and Southend
Fertility IVF
Warburg Stellar Value Chain An integrated logistics solutions platform which has acquired
Logistics
Pincus Solutions Patel Roadways and Kelvin Cold Chain
Embassy Industrial Industrial A JV with Embassy Group focusing on the development of
Parks (Exited) warehousing industrial and warehousing spaces near key cities across India
A platform that aims to acquire or partner with companies in
Vivtera BPO high end financial services and fast growth technology sectors
let by former core team members of Genpact
Xander Platform of retail assets - has properties in Surat, Chennai and
Virtuous Retail Real estate
Group Bengaluru under the VR brand

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P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 71
6 Tax and regulatory
updates
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Tax and regulatory updates
Introduction:
The year 2021 continued to be affected by the worst stable and predictable tax regime. The Budget aims to
pandemic the world has seen in more than a century. tax virtual digital assets and reduce the effective long
The year 2022 is expected to be the first normal year term capital gains tax rate.
after COVID-19 adversely impacted growth during the
We have summarized below some of the key tax and
two-year period covering 2020 and 2021.
regulatory changes introduced in 2021 and in the
Union Budget 2022 emphasized restoring growth recently announced Union Budget 2022 that could
normalcy while undertaking fiscal consolidation. From a impact the alternative investments ecosystem.
tax standpoint, the Government focused on providing a

Tax section:
A] Key tax proposals introduced vide Finance Bill, 2022

The Union Budget 2022, presented by the Hon’ble ► Following incentives currently applicable to
Finance Minister, Mrs. Nirmala Sitharaman, seeks to lay aircraft leasing activities in an IFSC also
the foundation and give a blueprint to steer the economy extended to leasing activities in relation to
over the next 25 years – from India at 75 to India at 100. ‘ships’ (if the unit has commenced its
operations on or before 31 March 2024):
From a direct tax perspective, the Budget offered the
following proposed amendments: ► Interest and royalty income paid by a
unit in IFSC to a non-resident on
1. Tax incentives for units located in International account of lease will be exempt; and
Financial Services Centre (IFSC)
► Income arising from the transfer of a
► Incentives to Offshore Banking Units – The ship leased by a unit in IFSC will be
existing provisions of the ITL provides many eligible for deduction under 80LA of
incentives to offshore banking units (OBUs) and the IT Act.
units located in IFSC. Further, benefit is also
provided to the non-residents dealing with such 2. Scheme for taxation of virtual digital assets
units. FB 2022 has now expanded the scope of
► A new section introduced to tax “virtual digital
incentives and provides for certain additional
assets” (VDA) effective 1 April 2023.
benefits as below:
► VDA to mean any information or code or
► It is proposed to grant an exemption on
number or token (not being Indian currency or
income arising to or received by a non-
any foreign currency), generated through
resident on transfer of offshore derivate
cryptographic means and includes non-fungible
instruments or over the counter derivatives
token or tokens (NFTs) of similar nature.
entered into with an OBU in the IFSC,
subject to prescribed conditions. ► Any income from transfer of VDA will now be
► It is proposed to grant an exemption on taxable @ 30%.
income of a non-resident from portfolio of ► No deduction of expenses or allowance of set-
securities/ financial products/ funds off of any loss to be allowed other than cost of
managed by a portfolio manager in IFSC, acquisition.
received in an account maintained with an
OBU in IFSC, to the extent such income ► No set off of losses or carry forward of losses
accrues/ arises outside India and is not will be allowed on transfer of VDA.
deemed to accrue/ arise in India. ► Gift of VDA will be taxable in the hands of
► Category I or Category II AIF in IFSC will be recipient.
exempt from the provisions of the IT Act
► Withholding tax @ 1% to be applicable on the
which taxes consideration received on
sum credited to a resident (excluding specified
issues of shares at premium exceeding fair
persons).
market value to residents; This brings
parity with AIFs outside IFSC which were
already excluded from the provisions.

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3. Provisions pertaining to dividend and bonus ► The Bill proposes to extend the applicability of
stripping to be made applicable to units of InvIT/ bonus stripping provisions to all securities
REIT/ AIF (being shares and stocks) and units of InvIT/
REIT/ AIF.
► Provisions of dividend stripping - Currently,
where a taxpayer incurs any losses (to the
4. Conversion of interest into debenture or any other
extent of dividend or income received) on sale
instrument not to be regarded as ‘payment’
of securities (being shares and stocks) or
mutual fund units, the said loss is ignored for ► The current provisions of the IT Act provide that
the purposes of computing the income deduction with respect to interest payable on
chargeable to tax, if the following conditions are loan or borrowing from, inter alia, specified
satisfied: institutions/ NBFCs/ scheduled or co-operative
► Taxpayer acquires the securities (being banks shall be allowed to be claimed as
shares and stocks) or mutual fund units deduction on payment basis.
within a period of three months prior to the ► Further, the existing provisions provide that
record date (i.e., the date fixed by the where such interest has been converted into a
company/ mutual fund for the purposes of loan or advance, then such interest shall not be
entitlement of the holder of the securities deemed to have been actually paid for the
to receive dividend or income, as the case purposes of claiming a deduction.
may be).
► It is now proposed to expand the above list by
► The taxpayer sells or transfers such
introducing an amendment whereby conversion
securities (being shares and stocks) within
of interest payable into a ‘debenture or any
a period of three months or mutual fund
other instrument by which liability to pay is
units within a period of nine months after
deferred to a future date’ shall also not be
the record date; and
deemed to have been actually paid and
► The dividend or income distributed on such accordingly, will not be allowed as a deduction.
securities (being shares and stocks) or
mutual fund units is exempt from tax. 5. Expense incurred to earn exempt income
disallowed in all circumstances
► It is proposed to amend the definition of ‘unit’ to
include units of an InvIT or REIT or AIF. ► The existing provisions of the IT Act disallow
Additionally, the term ‘record date’ is proposed any expenditure incurred to earn income
to be amended to include date fixed by the exempt from income tax. Hitherto, there arose
InvIT/ REIT/ AIF for the purposes of entitlement a controversy over allowability of such expense
of the holder of the units to receive income on when no corresponding income is earned in
their holdings. such year, with many courts holding the
expense to be deductible.
► Provisions of bonus stripping - Currently,
losses incurred by a taxpayer on sale of mutual ► To set the controversy to rest, the Budget 2022
fund units are ignored for the purposes of proposes to clarify that expense incurred to
computing the income chargeable to tax, if the earn exempt income shall be disallowed even in
following conditions are satisfied. cases where no corresponding income is earned
► Taxpayer acquires mutual fund units within during the year.
a period of three months prior to the record ► This amendment will be effective from
date (i.e., the date fixed by the mutual fund assessment year 2022-23.
for the purposes of entitlement of the
unitholder to receive additional units
without consideration).
► Taxpayer is allotted additional units without
any payment on the basis of original
holding.
► Taxpayer sells or transfers the original
mutual fund units within a period of nine
months after the record date while
continuing to hold all or any of the
additional units.

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6. Disallowance of surcharge and cess company on dividend received from a specified
foreign company will not be applicable and same
► There has been a dispute with conflicting rulings
will be taxable under the regular tax rates.
on deductibility of surcharge and cess levied on
income-tax as an expense while computing
8. Tax incentives for start-ups
business income. The Budget 2022 now
proposes to clarify that deduction for surcharge ► Currently, a 100% profit-linked deduction is
and cess will not be allowed in the computation available for income earned from eligible
of business income of the taxpayer. business to eligible start-ups which is
incorporated on or after 1 April 2016 and
► This amendment is effective retrospectively
before 1 April 2021. Tax deduction is now
from assessment year 2005-06.
extended by another year up to 31 March 2023.

7. Withdrawal of concessional rate of taxation on

9. Mergers, acquisitions, and corporate restructuring
dividend income received by Indian company from
related proposals
specified foreign company
► Reduction of goodwill from the block of assets
► Under the existing provisions of IT Act, if
(pursuant to amendment made in Finance Act
dividend income is received by an Indian
2021) shall be deemed to be a transfer.
company from a foreign company in which the
Indian company holds 26% or more of the ► TDS on sale of immovable property to apply on
nominal value of equity shares (specified higher of sale consideration or stamp duty
foreign company), a concessional tax rate of value.
15% (excluding surcharge and cess) was ► Surcharge on long term capital gains capped at
applicable in the hands of the Indian company 15% for Individuals, Hindu Undivided Families,
on such dividend income. Association of Persons and Body of Individuals
► The Budget 2022 now proposes that the (from the maximum rate of 37% earlier).
concessional rate of taxation for an Indian

B] CBDT issued guidelines / press releases during the year

1. CBDT provides restrictive interpretation of Most- received a favorable decision by any court on
favoured-nations (MFN) clause the applicability of MFN clause.

► The CBDT has issued the Circular considering

2. CBDT issues thresholds for triggering “significant
several representations received, seeking
economic presence” in India
clarity on the applicability of the MFN clause.
The Circular provides that benefit of lower rate ► To tax non-residents (NR) carrying out business
and restricted scope under MFN clause will be remotely in India, India expanded the concept of
extended only when all the below conditions are business connection (BC) to include a new nexus
satisfied cumulatively: rule based on “significant economic presence”
(SEP). As per SEP provisions, a BC will be
► India’s DTAA with the country which has
constituted in India based on below parameters:
beneficial lower rate or restricted scope
(referred as the third State) is entered into ► Revenue-linked condition: Any transaction
after the signature/entry into force, in respect of any goods, services or
depending on language of MFN Clause, of property carried out by an NR with any
India’s DTAA. person in India, including provision of
download of data or software in India, if the
► The third State must be an OECD member
aggregate of payments arising from such
at the time of signing its treaty with India.
transaction or transactions during the tax
► India limits its taxing rights in relation to
year exceeds the amount as may be
rate or scope of taxation in its treaty with
prescribed; or
the third State.
► User-linked condition: Systematic and
► India issues a separate notification under
continuous soliciting of its business
the Income Tax Laws (ITL) for importing the
activities or engaging in interaction with
favorable benefits of third State treaty into
such number of users in India as may be
the original treaty.
prescribed.
► Further, the above Circular will not be
► For determination of above thresholds, the
applicable in case of taxpayers who have
CBDT invited suggestions from the stakeholders

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 and pursuant thereto, on 3 May 2021, it issued the entire amount of payment.
a notification prescribing the revenue and user Furthermore, if TDS on purchases has
thresholds for applicability of SEP provisions as already been made on the goods returned
under: and the money is returned by the seller, an
adjustment can be done against subsequent
► For revenue-linked condition stated in (a)
purchases made from the same seller.
above, a revenue threshold of INR2 crores
(INR20 million) shall be applicable. ► Non-resident (NR) buyer is not required to
do TDS on purchases from resident sellers,
► For user-linked condition stated in (b) above, a which are not connected with the NR
user threshold of INR3 lakhs (INR0.3 million) buyer’s permanent establishment (PE) in
shall be applicable. India. For this purpose, “PE" shall mean to
include a fixed place of business through
3. CBDT issues guidelines for withholding tax on
which the business of the enterprise is
purchase of goods from resident sellers
wholly or partly carried on.
► As a measure to widen and deepen the tax net, ► TDS on purchases shall not apply in the first
the Finance Act, 2021 (FA 2021) widened the year of incorporation of a buyer.
withholding provisions by extending it to buyers
► TDS on purchase or TCS on sales shall not
on purchase of goods from resident sellers of
apply to seller/buyer whose entire income
value exceeding INR5 million during the tax
is exempt.
year, subject to certain specified thresholds and
exclusions [tax deducted at source (TDS) on ► The Circular also provides clarity on overlap of
purchases]. This is in addition to provision for TDS on purchases with TDS on e-commerce
transactions and TCS on sale.
tax collection by seller from buyer on receipt of
consideration towards sale of goods introduced
4. CBDT issues further guidelines on withholding of
by the Finance Act, 2020 (FA 2020), with effect
taxes for sale and purchase of goods and e-
from 1 October 2020 [tax collected at source
commerce platforms
(TCS) on sales].
► The Finance Act, 2021 (FA 2021) widened the
► In response to representations received from
withholding provisions by extending it to buyers
stakeholders requesting clarifications on
on purchase of goods from resident sellers of
various issues relating to the above provision,
value exceeding INR5 million during the tax
the Circular provides the following clarifications
year, subject to certain specified thresholds and
for removal of difficulties:
exclusions (TDS on purchases). This was in
► Transactions of securities or commodities addition to TCS on sales by seller from buyer on
traded on a recognized stock exchange or receipt of consideration towards sale of goods
cleared and settled by a recognized and TDS on EOP introduced by the Finance Act,
clearing corporation and transactions in 2020 (FA 2020), with effect from 1 October
electricity, renewable energy certificates 2020.
and energy certificates traded through
► In response to representations received from
regulated power exchanges, are exempt
stakeholders requesting clarifications on
from TDS on purchases.
various issues relating to the above provisions,
► TDS on purchases shall not be applicable if
the Circular provides the following clarifications
either the payment or the credit of the
for removal of difficulties:
amount with respect to purchase of goods
► EOP shall not be liable to withhold taxes on
occurs before 1 July 2021, but for
e-auctions carried out for price discovery
computing annual threshold of INR5m, the
through its electronic platform, provided
amounts paid/credited prior to 1 July 2021
certain conditions are satisfied.
during tax year 2021-22 are to be included.
► In line with the clarification provided earlier
► In cases where TDS on purchases is made
in respect of goods and services tax (GST),
on credit of amount to seller and the Goods
with respect to indirect taxes other than
and Services Tax (GST) component is
GST (like value added tax (VAT)/sales
indicated separately in a
tax/excise etc.), which are included in the
contract/agreement between the buyer and
sale price of goods, if TDS is made at the
the seller, TDS on purchases shall be made
time of credit of amount in the account of
on the amount of purchases excluding GST.
the seller and in terms of the agreement or
Where, however, TDS on purchases is made
contract between the buyer and the seller,
on payment (where payment is earlier than
the component of indirect tax is indicated
credit), TDS on purchases would apply on

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 separately in the invoice, then TDS is to be difficulties arising in giving effect to these
made on the amount credited without provisions.
including such indirect tax. If TDS is made
at the time of payment, then TDS on 6. CBDT issues rule prescribing methodology for
purchases is applicable on the indirect tax determining short term capital gains and written
component. down value for block of intangible asset comprising
goodwill
► With respect to certain goods (which are
covered by a different TCS provision other ► The Notification inserts a new rule (Rule 8AC)
than the general provision of TCS on sales) which provides that where goodwill is the only
which are to be utilized by the buyer, being asset in block of intangible assets on which
resident in India, for the purpose of depreciation is claimed up to 31 March 2020,
manufacturing, processing or producing then the WDV of such block of intangible assets
articles or things or for the purpose of as on 1 April 2020 will need to be reduced by
generation of power (i.e., industrial the WDV of goodwill computed as the difference
purposes) and not for trading purpose on between actual cost of goodwill less
which TCS is not applicable in terms of depreciation allowable on such goodwill thereby
declaration furnished by the buyer, the resulting in Nil WDV of block of intangible
Circular clarifies that TDS on purchases will assets.
be applicable and, accordingly, the buyer
► Where goodwill is one of the assets in intangible
will need to do TDS on purchases if other
block, then the WDV of intangible block of asset
conditions are satisfied.
as on 1 April 2020 needs to be reduced by the
► With respect to TDS on purchases by standalone WDV of goodwill computed as the
government departments (not being a difference between actual cost of goodwill and
public sector undertaking or corporation), depreciation allowable on such goodwill.
the Circular clarifies that government
departments not carrying out any business ► Where standalone WDV of goodwill is higher
or commercial activity will not be required than aggregate of opening WDV of entire
to do TDS on purchase since the primary intangible block of asset as on 1 April 2020 and
requirement for being considered a “buyer” actual cost of any intangible asset acquired in
will not be fulfilled. On the other hand, if a TY 2020-21, then the excess shall be deemed
department is carrying on a to be capital gain arising from the transfer of
business/commercial activity, TDS on short-term capital asset.
purchase will apply, subject to satisfaction ► However, where the block of intangible block of
of other conditions. asset comprises of goodwill alone, then any
► Furthermore, the Circular also clarifies that cessation of block of intangible due to reduction
any other person, such as public sector of goodwill component will not give rise to
undertakings or a corporation established capital gains or capital loss.
under central or state act or any other such
► While the statutory provision, which empowers
body, authority, or entity, are not covered
CBDT to notify the Rule was enacted by Finance
by the exemption above and are required to
Act, 2021 (FA 2021) with effect from TY 2020-
do TDS on purchases.
21, the Notification is silent on the effective
5. CBDT issues guidelines and notifies rules for date of new Rule. The new Rule 8AC is
taxation of receipt of cash or specified assets by published in Official Gazette on 7 July 2021. Its
partners in connection with reconstitution of firms applicability to TY 2020-21 to which it should
intended to apply will be a highly contentious
► Pursuant to the revamped scheme of provisions
issue since it is not explicitly notified to come
for taxation of dissolution or reconstitution of
into effect from 1 April 2021 onwards.
firm/association of person (AOP)/body of
individuals (BOI) (hereafter collectively referred
7. CBDT exempts return filing requirement for certain
to as “specified entity”) introduced in Income
non-residents investing in the IFSC in India
Tax Laws (ITL) at the enactment stage of
Finance Bill, 2021 (FB 2021), the Central Board ► The CBDT has by way of the Notification
of Direct Taxes (CBDT) has, in deference to the exempted certain class/classes of person from
powers granted in these provisions, issued the requirement of furnishing a return of
guidelines as part of Circular No. 14/2021 income under 139(1) of the Act from
dated 2 July 2021 (Guidelines) with the assessment year 2021-22 onwards. The Non-
approval of the Central Government to address

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 residents covered under the said notification in India (indirect transfer) was a subject matter
inter-alia includes: of intense litigation in India.
► Non-resident unit holders of a specified ► In January 2012, in a landmark judgment, the
fund Indian Supreme Court (SC), in the case of
► Non-resident eligible foreign investor Vodafone BV ruled that transfer of shares of a
company incorporated outside India would not
8. CBDT exempts eligible foreign investors from the
be taxable in India.
requirement of obtaining PAN
► However, considering the fact that the verdict
► CBDT has provided an exemption to eligible
of the SC was inconsistent with the legislative
foreign investors investing in the specified
intent, Government of India (GoI) introduced
securities and non-resident investors/ unit
certain “clarificatory” changes to the Income
holders of Category III Alternative Investment
Tax Act (ITA) vide Finance Act, 2012 (FA 2012)
Funds (AIFs) which are set-up in IFSC from the
with retroactive effect from 1 April 1962, to
requirement of obtaining a Permanent Account
clarify that transfer of shares or interest in a
Number (PAN) (i.e., the Indian tax identification
foreign entity would be taxable in India, if such
number) subject to satisfaction of prescribed
shares derive substantial value from assets
conditions.
located in India.
► The Notification is effective from 4 May 2021.
► The move of the GoI to levy retrospective taxes
9. CBDT issues guidelines on loans and borrowings has been hugely criticized on the grounds that it
taken by sovereign wealth fund/ pension fund for militated against the objective of GoI to provide
making tax free investments in India tax certainty and damaged India’s reputation of
an attractive investment destination. The
► Section 10(23FE) of the ITL provides for an retrospective amendment was considered to be
exemption to specific entities such as sovereign breach of India’s obligation under the BIPAs on
wealth fund and pension fund of foreign nations the basis that India failed to provide stable,
on specified sources of income arising from predictable and foreseeable tax regime and
specified investment made in India within a retroactive amendments are inimical and
specified period. The said exemption is provided fundamental affront to the principles of legal
subject to fulfilment of various conditions laid certainty.
down.
► In the past few years, GoI has been undertaking
► One of the circumstances in which the specified major reforms in the financial and infrastructure
person is not eligible for exemption is where a sector to create a positive environment for the
specified person has loans or borrowings, investors. However, the retrospective
directly or indirectly, for the purposes of making amendment and the criticism around such
investment in India. Prior to the issue of CBDT amendment continues to be a sore point for the
Circular, there was an ambiguity regarding the investors.
meaning of the expression “indirectly” in the
above-mentioned circumstance. ► Considering the importance and the need to
attract foreign investments into India, especially
► As per CBDT Circular, where loans and post the economic set back due to COVID-19,
borrowings have been taken by the entities GOI has proposed to remove the retrospective
eligible for exemption under section 10(23FE) effect of the FA 2012 amendment.
of the ITL as well as their holding entity or any
entity in the chain of holding or an associate ► In this regard a bill has been passed in the Lok
concern (hereinafter referred to as “group Sabha (the lower house of Indian parliament)
concerns”), with the purpose of making titled “The Taxation Laws (Amendment) Bill,
investment into India, such entities shall not be 2021” (Bill) on 6 August 2021. The proposals of
eligible for exemption under the the Bill are aimed at achieving the following
aforementioned section. objectives:
► No levy of taxes on indirect transfers
10. India proposes to remove retrospective undertaken prior to 28 May 2012 (specified
applicability of indirect transfer provisions date)

► Prior to 2012, the issue of taxability of gains ► No assessment to be made/no enforcement

arising from transfer of shares of a foreign of tax demand/ no notices to be issued in
company deriving substantial value from assets respect of indirect transfers undertaken
prior to the specified date

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 ► Nullification of demand orders already taxpayer. CBDT first issued transfer pricing safe
raised/assessment made/ penalty levied in harbor rules (SHR) on 18 September 2013,
respect of indirect transfers undertaken applicable for five years from FY 2012-13 to FY
prior to the specified date on fulfilment of 2016-17. The CBDT through notification dated
specified conditions (viz. withdrawal of 7 June 2017 amended the SHR, which were
pending litigations) applicable for three FYs from FY 2016-17
► Refund of taxes collected pursuant to through FY 2018-19. For FY 2016-17,
demand order issued in respect of Indirect taxpayers had the option to elect the rule which
transfers undertaken prior to the specified was more beneficial. On 20 May 2020, the
date. However, such refund would be CBDT issued a notification amending the SHR to
without any interest. extend the applicability to FY 2019-20, without
any modifications.
► Amendment of FA 2012 (which provided
for the validity of notices/ orders passed in ► On 24 September 2021, the CBDT issued a new
respect of indirect transfers undertaken notification extending the applicability of SHR to
prior to the specified date) to provide that FY 2020-21, without any further modifications.
such notices/ orders shall cease to apply Taxpayers opting for SHR for FY 2020-21 would
subject to satisfaction of the specified need to file the return of income for the year on
conditions. or before the date of furnishing the prescribed
Form 3CEFA for opting for the SHR. The due
11. India Tax Administration extends applicability of date for filing is 28 February 2022.
transfer pricing safe harbor rules to financial year
► Further, the CBDT has yet to prescribe SHR for
2020-21
attribution of profits to a business connection or
► A “safe harbor” is defined in the ITL as permanent establishment (PE) of a nonresident,
circumstances under which the tax authorities which was introduced under Finance Act 2020
will accept the transfer price declared by the

C] Supreme Court Judgements

1. SC holds gains arising on transfer of depreciable “investment” in its balance sheet. On sale of the
asset will be qualified as short-term capital gains flat in 1997-98, the Taxpayer claimed that
there was transfer of long-term capital asset
► In the case of Sakthi Metal Depot (Taxpayer),
resulting in long-term capital gain. The
the issue pending before SC was whether on
Taxpayer contented that the flat ceased to be a
transfer of a capital asset on which depreciation
depreciable asset since no depreciation was
was claimed and allowed to the Taxpayer for a
charged on it from tax year 1995-96 onwards
long period but not used in business
and its nature was changed from business asset
subsequently, would qualify as long-term or
to “held as investment”. The tax authority held
short-term capital gains under the provisions of
that capital gains on transfer of the flat be
the ITL.
considered as short-term capital gains by virtue
► The ITL has a special provision for computation of the special provision.
of capital gains arising on transfer of a
► The SC, on 7 July 2021, upheld the ruling of the
depreciable asset. The special provision deems
Kerala High Court (HC) in which it was held that
that gains arising on transfer of a depreciable
the flat will retain its character as a depreciable
asset shall be short-term capital gains.
asset even if it was not used for business
► The Taxpayer claimed depreciation on a flat, as purposes later on, and no depreciation was
a business asset, for 21 years till tax year 1994- claimed thereon. Consistent with the special
95. The Taxpayer stopped claiming depreciation provision, gains were rightfully held as short-
from tax year 1995-96 and classified the flat as term capital gains

D] Policy Proposals

The Union Budget 2022 offered the following policy ► Surety bonds to act as a substitute for bank
proposals: guarantee in government procurements. IRDAI has
given a framework for the issue of surety bonds by
► The Reserve Bank of India to issue ‘digital rupee’
insurance companies.
backed by blockchain.

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► Scheduled commercial banks to set up 75 digital ► For timely settlement of disputes under
banking units in 75 districts. international jurisprudence, International Arbitration
Centre to be set-up in GIFT city.
► 1.5 lakhs post offices to connect with core banking
system enabling financial inclusion ► World-class foreign universities and institutions will
be allowed in the GIFT City to offer various courses
► The Special Economic Zones Act will be replaced
to facilitate availability of high-end human resources
with a new legislation to enhance competitiveness of
for financial services and technology.
exports.

Regulatory section:

A] Amendments to Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 (NDI Rules)
RBI issued the amendment to NDI Rules on 12 October sharing land border with India (China etc.), shall
2021, wherein the following key changes have been continue to be under the approval route.
introduced:
FDI in petroleum and natural gas sector
Increasing the FDI in telecom sector
► Department of Economic Affairs (“DEA”), Ministry of
► Union Cabinet has, amongst other reforms in the Finance amended the Foreign Exchange
telecom sector, to boost the investment, approved Management (Non-debt Instruments) Rules, 2019
the increase in the FDI in the telecom sector from (“NDI Rules”) for FDI in the petroleum and natural
the existing 49% to 100% under automatic route, gas sector.
subject to all safeguards.
► In terms of the extant regulations, FDI up to 49% is
► With this notification, the liberalization of FDI Policy permissible under the automatic route for
in Telecom sector is effective from October 12, “Petroleum refining by the public sector
2021 and henceforth, any foreign investments in undertakings (PSUs), without any disinvestment or
the Telecom sector other than from countries dilution of domestic equity in the existing PSUs.”
sharing land border with India or whose beneficial
► As per the amendment, in case an 'in-principle'
ownership is in such countries, shall be under
approval for strategic disinvestment of a PSU has
automatic route.
been granted by the Government, FDI up to 100 %
► Cases in which foreign investment or beneficial under the automatic route is permitted.
owner of foreign investment, is from a country

B] Introduction of Unmanned Aircraft System Rules, 2021 (“UAS Rules”)

The final UAS Rules were notified by the Government of ► RPAS (i.e., UAS piloted from a remote pilot
India in March 2021, which is the new law governing civil station)
use of drones in India. We have summarized some of the ► Model RPAS (i.e., UAS operating without
key updates below. payload and used for educational purposes only
► Applicability: The applicability of the UAS Rules has within visual line of sight)
been extended to all UAS registered in India, even ► Autonomous Unmanned Aircraft System (i.e.,
when they are operating outside Indian territory. UAS that does not require pilot intervention in
Further, these provisions shall also apply to all the management of the flight)
persons seeking to own or possess, or seeking to
► Limitations on Foreign Companies: Foreign entities
engage in importing, exporting, manufacturing,
or their majority / wholly owned Indian subsidiaries
trading, leasing, operating, transferring, or
are restricted to be registered as an Authorized
maintaining a UAS in India.
Person.
► Categorization and Classification of UAS: The UAS
► Research and Development: The UAS Rules require
Rules categorizes UAS into
that research and development of UAS only be
► Aeroplane conducted by authorized R&D organizations.
► Rotorcraft
► Ownership, Sale and Purchase of UAS: The UAS
► Hybrid unmanned aircraft system Rules do not permit any UAS to be used, operated,
These categories are further sub-categorized as the or transferred in India unless it has been registered
following: with the DGCA and has a certificate of conformance
issued either by a UAS Importer or UAS
Manufacturer.

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 80
► Exemptions under UAS Rules: The Central wholly or partially, subject to such conditions, if any,
Government has been given the power to exempt as may be specified by the Central Government in a
any UAS or class of UAS or any person or class of written general or special order.
persons from the operation of the UAS Rules, either

C] Other key developments

Reserve Bank of India related:

A] RBI Introduces Registration of Factors (Reserve Bank) Regulations, 2022 and the Registration of
Assignment of Receivables (Reserve Bank) Regulations, 2022
► To broaden the ambit of companies that can carry ► Maintain a minimum net owned fund of INR
out the business of factoring; and (ii) introduce 5,00,00,000 (Indian Rupees Five Crores)
administrative efficacy in the process of assigning subject to change at the discretion of the RBI
receivables as governed by the Act, the Central
► Ensure regulatory compliance
Government, vide RBI have issued Registration of
Factors (Reserve Bank) Regulations, 2022 (“Factor ► In the event that a NBFC does not satisfy the
Registration Regulation”) and the Registration of eligibility criterion to operate as a NBFC-Factor, it
Assignment of Receivables (Reserve Bank) will still have the option at its disposal to undertake
Regulations, 2022 (“Assignment Registration the business of factoring as a Non-Banking Financial
Regulation”). Company – Investment and Credit Company (“NBFC
– ICC”).NBFC - ICC can apply to the RBI for
► The Factor Registration Regulation prescribed
conversion from a NBFC-ICC to a NBFC-Factor as
criteria to be satisfied of NBFCs that can undertake
long as it ensures that its financial assets comprises
factoring business which includes:
at least 50% of its total assets and the income
► Such NBFC should not accept or hold public attained from its factoring business comprises at
deposits least 50% of its gross income.

► Maintain total assets of at least INR ► The Government of India has also introduced the
10,00,00,000 crores as per its last audited Assignment Registration Regulations which seeks to
balance sheet establish a timeline for registering and recording
transactions pertaining to the assignment of
receivables between a factor and an assignor.

B] RBI amends Foreign Exchange Management (Debt Instruments) Regulation, 2019 for investment by
Foreign Portfolio Investors (“FPI”)
► RBI has amended Schedule 1 of Foreign Exchange ► As per the amended regulations, FPIs have been
Management (Debt Instruments) Regulations, 2019. granted permission to purchase debt securities
issued by Infrastructure Investment Trust and Real
Estate Investment Trust.

C] Investment in NBFCs from FATF non-compliant jurisdictions

► On 14 June 2021, RBI issued a Notification with (ii) Jurisdictions under Increased Monitoring.
respect to investment in Payment System Operators ► A FATF compliant jurisdiction is one whose name
(“PSOs”) from FATF non-compliant jurisdictions as does not appear in any of the above-mentioned lists.
under:
► Investments from FATF compliant jurisdiction:
► Periodic identification of jurisdictions by FATF with Investments in PSOs from FATF non-compliant
weak measures to combat money laundering and jurisdiction would not be treated at par with that
terrorist financing in its following publications: from the FATF compliant jurisdiction.
(i) High-Risk Jurisdictions subject to a Call for
Action; and

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 81
► Investments from non-compliant FATF jurisdiction:

Existing investments in Investments prior to the classification of the source or intermediate jurisdiction(s)
PSOs as FATF non-compliant jurisdiction, may
(i) continue with the investments; or
(ii) bring in additional investments

as per extant regulations to support continuity of business in India.

New investments in PSOs; New investors from or through FATF non-compliant jurisdictions, whether in
or existing PSOs or in entities seeking authorization as PSOs, should NOT be allowed
application for new to acquire ‘significant influence’ directly or indirectly in the investee, as defined in
registration the applicable accounting standards.

In other words, fresh investors (directly or indirectly) from FATF non-compliant

jurisdictions in aggregate should be less than the threshold of 20% of the voting
power (including potential voting power*) of the PSOs.

*Potential voting power could arise from instruments that are convertible into equity, other instruments with contingent voting
rights, contractual arrangements, etc. that grant investors voting rights (including contingent voting rights) in the future. In such
cases, it should be ensured that new investments from FATF non-compliant jurisdictions are less than both (a) 20% of the existing
voting powers; and (b) 20% of existing and potential voting powers assuming those potential voting rights have materialized.

Securities and Exchange Board of India (‘SEBI’) related:

A] Amendment to SECC Regulations, 2018

The Securities Contracts (Regulations) (Stock Exchanges Key highlights of the amendment are as under:
and Clearing Corporations) Regulations, 2018 (“SECC
► As per Regulation 19(1) of the SECC Regulations, a
Regulations”) were introduced by SEBI for the purposes
key eligibility criterion for persons desirous of
of regulating recognition, ownership and governance in
holding or acquiring shares or voting rights in a
stock exchanges and clearing corporations. Accordingly,
recognized stock exchange or clearing corporation is
all the investments into the National Stock Exchange
that such person must satisfy the ‘fit and proper
(“NSE”), the Bombay Stock Exchange (“BSE”) and the
person’ parameter prescribed under Regulation
Multi Commodity Exchange (“MCX”) are governed by the
20(2)1 of the SECC Regulations.
SECC Regulations.
► However, second proviso to Regulation 19(1)
On 13 August 2021, SEBI has issued Securities provides an exemption from satisfying such
Contracts (Regulations) (Stock Exchanges and Clearing requirement to a person holding or acquiring,
Corporations) (Second Amendment) Regulations, 2021 directly or indirectly, less than 2% equity shares or
(“Amendment Regulations”) for the purposes of voting rights of a ‘listed’ recognized stock exchange.
amending the SECC Regulations.
► Vide this amendment, SEBI has expanded the scope
of the exemption even to an ‘unlisted’ stock
exchange.

B] SEBI Releases AIF (Second Amendment) Regulations, 2021 and AIF (Third Amendment) Regulations,
2021

SEBI released the SEBI (Alternative Investment Funds) ► “Start-up” has been defined to mean an entity
(Second Amendment) Regulations, 2021 (“Second which fulfils the criteria for start-up as specified
Amendment Regulations”). The Second Amendment by the Department for Promotion of Industry
Regulations are in furtherance of SEBI’s board meeting, and Internal Trade (“DPIIT”).
dated March 25, 2021 (“Board Meeting”) where certain ► “Venture capital undertaking” has been defined
amendments were proposed to SEBI (Alternative as domestic company which is not listed on a
Investment Funds) Regulations, 2012 (“AIF recognized stock exchange at the time of
Regulations”). making investments.
► A summary of the changes introduced by the
► Angel funds, as a sub-category of a Venture
Amendment Regulations is provided below:
Capital Fund under Category I AIF, are now

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 82
 eligible to invest in Start-ups, rather than VCUs certain investors in an AIF to be identified as
as earlier described under Regulation 19F (1) of Accredited Investors (“AIs”).
the AIF Regulations. This amendment broadens ► Accredited agency means a subsidiary of a
the investment horizon of angel funds as now recognized stock exchange or a subsidiary of a
these funds can invest in an entity which, inter depository or any other entity as may be
alia, (a) has not crossed 10 years and (b) whose specified by the Board from time to time.
turnover has not exceeded INR 100 crores in
► Accredited Investors means is any person who
any of the financial years, beginning from the
is granted a certificate of accreditation by an
date of such entity’s incorporation or
accreditation agency. The Amendment
registration.
Regulations provide certain financial
► The scope of the definition of Venture Capital parameters which need to be satisfied to grant
Undertaking (“VCU”) has been broadened for the AI status to resident Indians.
Category I AIFs by removal of the list of
► The Amendment Regulations provide a deemed
restricted activities in the definition of a VCU.
AI status to (i) Central and State Governments;
This should enable Category I AIFs to now
(ii) any developmental agencies set up under
allocate monies towards NBFCs which was
the aegis of the Central and State Governments;
earlier prohibited.
(iii) any funds set up by the Central Government
► AIFs have been permitted to invest in an or the State Governments; (iv) qualified
investee company, directly or through other institutional buyers4; (v) Category I Foreign
AIFs, subject to diversification limits of (a) 25% Portfolio Investors; (vi) sovereign wealth funds;
(of investible funds) for Category I and II AIFs; and (vii) multilateral agencies and any other
and (b) 10% (of investible funds) of Category III entity as may be specified by SEBI. Since these
AIFs. entities are deemed to be AI, it is not incumbent
► AIFs which are authorized under the fund on them to obtain any certification of
documents to invest in units of Alternative accreditation from an AA.
Investment Funds shall not offer their units for ► Large Value Fund for accredited investors”
subscription to other Alternative Investment means an AIF or scheme of an AIF in which each
Funds. investor (other than the Manager, Sponsor,
► Alternative Investment Fund shall not invest employees or directors of the AIF or employees
except with the approval of seventy five percent or directors of the Manager) is an accredited
of investors by value of their investment in the investor and invests not less than Rs. 70 crores.
Alternative Investment Fund in - (a) associates;
► As required under SEBI (Alternative Investment
or (b) units of Alternative Investment Funds
Funds) Regulations, 2012, as amended and SEBI
managed or sponsored by its Manager, Sponsor
circular dated October 21, 2021 pertaining to
or associates of its Manager or Sponsor.
modalities for filing the placement memorandum
► SEBI has released the SEBI (Alternative Investment through the merchant banker, the placement
Funds) (Third Amendment) Regulations, 2021 memorandum of the Fund is required be filed
(“Third Amendment Regulations”) on August 03, through a SEBI registered merchant banker.
2021. The amendment introduces the criteria for
► Ernst & Young Merchant Banking Services LLP is a
SEBI registered Category I Merchant Banker

C] The Securities and Exchange Board of India (‘SEBI’) has notified Securities and Exchange Board of
India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (‘SBEBSE Regulations’ or
‘New Regulations’) on 13 August 2021.

► These regulations have merged the erstwhile SEBI ► Option for companies to change the manner of
(Issue of Sweat Equity) Regulations, 2002 (“Sweat administration from direct route to trust route
Equity Regulations”) and SEBI (Share Based and vice versa, subject to conditions
Employee Benefits) Regulations, 2014 (“SBEB ► Increase in time limit for appropriation of shares
Regulations”), into a single Regulation. acquired by the trust under secondary
► Some of the key changes implemented in the New acquisition
Regulations are as under: ► Relaxation to vesting conditions and lock-
► Change in the definition of “employee” requirements in specific circumstances

► Coverage of employees of Group companies

including Associate company

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 83
Regulations issued by International Financial Services Centres Authority (“IFSCA”)

A] Regulations on issue and listing of securities in IFSC

► The IFSCA has issued regulations on issue and listing ► Listing of Special Purpose Acquisition
of the securities in the IFSC in India (Regulation). Companies (SPACs)

► The Regulation inter alia provides a framework on ► Listing of Depository Receipts

the following aspects: ► Listing of Debt Securities
► Public offer of Specifies securities [IPO and ► Listing of Environment, Social and Governance
FPO] (ESG) Debt Securities
► Listing of Start-up and SME companies ► The Regulation were issued on 16 July 2021.
► Secondary listing of Securities

B] Framework for undertaking Global/ Regional Corporate Treasury activities by Finance Company/
Financial Unit in IFSC
► The International Financial Services Centres ► The Framework is aimed at allowing the FCs/ FUs in
Authority (IFSCA) has issued a framework for an IFSC in India to undertake permitted treasury
undertaking Global/ Regional Corporate Treasury activities and provide permitted treasury services to
Centres activities by Finance companies (FCs)/ its group entities.
Finance units (FUs) in an IFSC in India (Framework).
► The Circular providing the Framework was issued on
25 June 2021.

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 84
P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 85
Glossary of acronyms

1. ADIA – Abu Dhabi Investment Authority

2. AIFs – Alternate Investment Funds
3. AMT – Alternative Minimum Tax
4. AOP – Association of Persons
5. API – Active Pharmaceutical Ingredient
6. AUM – Assets under management
7. AY – Assessment Year
8. B2B – Business-to-Business
9. B2C – Business-to-Consumer
10. BNPL – Buy Now Pay Later
11. BOI – Body of Individuals
12. CBDT – Central Board of Direct Taxes
13. CDMO – Contract Development and Manufacturing Organization
14. CDPQ – Caisse de dépôt et placement du Québec
15. CPPIB – Canada Pension Plan Investment Board
16. CRO – Contract Research Organization
17. D2C – Direct to Consumer
18. DGCA – Directorate General of Civil Aviation
19. DIPP – Department of Industrial Policy and Promotion
20. DPIIT – Department for Promotion of Industry and Internal Trade
21. DRHP – Draft Red Herring Prospectus
22. DTAA – Double Taxation Avoidance Agreement
23. EMEA – Europe, the Middle East and Africa
24. EPC – Engineering, Procurement and Construction
25. FDI – Foreign Direct Investment
26. ESG – Environmental, Social, and Corporate Governance
27. EV – Electric vehicles
28. FAQ – Frequently asked questions
29. FATF – Financial Action Task Force
30. FDI – Foreign Direct Investment
31. FII – Foreign Institutional Investment
32. FPI – Foreign Portfolio Investment
33. GAAR – General anti avoidance rule
34. GFC – Global financial crisis
35. GIC – GIC Private Limited
36. GIP – Global Infrastructure Partners
37. GoI – Government of India
38. GP – General partner
39. GST – Goods and services tax
40. IFC – International Finance Corporation
41. IFCI – Industrial Finance Corporation of India
42. IFSC – International Financial Services Centre

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 86
43. InvIT – Infrastructure investment trust
44. IPO – Initial public offering
45. IT/ITES – Information Technology / Information Technology Enabled Services
46. ITL – Income Tax Law
47. IRDA – Insurance Regulatory and Development Authority of India
48. KKR – Kohlberg Kravis Roberts & Co
49. LPs – Limited Partners
50. M&A – Mergers and Acquisitions
51. MAT – Minimum Alternate Tax
52. MFI – Micro Finance Institution
53. MFN – Most Favoured Nation
54. MOPE – Motilal Oswal Private Equity
55. MSME – Micro, Small and Medium Enterprises
56. NATO – The North Atlantic Treaty Organization
57. NBFC – Non Banking Financial Company
58. NDI – Non-Debt Instrument
59. NHAI – National Highway Authority of India
60. NIIF – National Investment and Infrastructure Fund
61. NPA – Non-performing Asset
62. OECD – Organisation for Economic Co-operation and Development
63. OMERS – Ontario Municipal Employees Retirement System
64. OTPP – Ontario Teachers' Pension Plan
65. PAN – Permanent Account Number
66. PE/VC – Private Equity/Venture Capital
67. PIF – Public Investment Fund of Saudi Arabia
68. PIPE – Private investment in public equity
69. PLI – Production-linked incentive
70. POS – Payment System Operator
71. PSP – Public Sector Pension Investment Board
72. QIP – Qualified Institutional Placement
73. QIA – Qatar Investment Authority
74. RBI – Reserve Bank of India
75. RE – Real estate
76. REIT – Real estate investment trust
77. ROIC – Return on invested capital
78. SaaS – Software as a service
79. SBI – State Bank of India
80. SEBI - Securities and Exchange Board of India
81. SECC – Stock Exchanges and Clearing Corporation
82. SPAC - Special purpose acquisition company
83. SKU – Stock keeping unit
84. SWF – Sovereign wealth fund
85. TCS – Tax collected at source
86. TDICI - Technology Development and Information Company of India
87. TDS – Tax deducted at source
88. VDA – Virtual Digital Asset
89. UAS – Unmanned Aircraft System
90. WDV – Written down value

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 87
Appendices
About EY’s Private Equity Services

EY has been working with the private equity industry for commitment to deliver exceptional client service and
more than 25 years, with approximately 25,000 seasoned create a better working world. EY has offices spread
professionals worldwide dedicated to the industry and its across 11 cities in India. Worldwide, our 270,000+
business issues. EY serves 74% of the top 300 PE firms people across 150+ countries and 700+ cities are united
included in the Global PEI 300 firms list. Private equity by our shared values and their unwavering commitment
firms, portfolio companies and investment funds face to quality.
complex challenges. They are under pressure to deploy
► EY’s India Private Equity Services Practice has been
capital amid geopolitical uncertainty, increased
among the top advisors for private equity deals over
competition, higher valuations, and rising stakeholder
the past ten years. EY has been awarded the “Most
expectations. Successful deals depend on the ability to
Active Transaction Advisor” award by Venture
move faster, drive rapid and strategic growth and create
Intelligence for 2009-2013 and also the “Investment
greater value throughout the transaction life cycle. EY taps
Bank of the Year, Private Equity” award by VC Circle in
its global network to help source deal opportunities and
2012, 2017 and 2020 as well as for M&A in 2018.
combines deep sector insights with the proven, innovative
strategies that have guided the world’s fastest growing ► EY’s India Private Equity Services Practice provides
companies. value to PE funds and their portfolio companies
through its deep sector and service expertise. EY India
In India, EY is among the leading providers of advisory, is organized around key industry verticals in a matrix
tax, transactions, and assurance services. The structure that enables us to offer an unparalleled blend
organization was ranked as the number one professional of industry expertise and functional skills. We actively
services brand for strategy and transaction services in track about 15 sectors with sector leads driving our
India in 2019*, which is a testimony to our relentless penetration in each of those sectors.

Exhibit 130

EY has been ranked as #1 Financial Advisor for almost two decades across Mergermarket, Thomson Reuters and
Bloomberg**. Our position as the foremost M&A advisor in the Indian mid-market enables us to create a robust deal
origination pipeline for our PE/VC clients, acting as the tip of the spear of what is India’s dominant PE Services practice.

Merger market Refinitiv/Thomson Reuters Bloomberg

73 78
72

47 44 45
37 41
33 34 34 36 33
29 33 30
24 26 23 26 23
22
16 19 19 19
12 14 15 15

2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021

EY Closest competitor

* as per Global Brand Survey, conducted by an independent research agency Ipsos

** for most number of deals

 # 1 advisor on deal count in Financial advisory league tables across databases

 Consistently maintaining a significant lead from closest compete
 Adjudged as the Investment Bank of the Year – PE, 2020 by VCCircle

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 88
We offer an array of services to Private Equity funds and their portfolio/investee companies through our various
service lines.

Exhibit 131

GP / LP Services
(Tax Structuring, Operating Fund assurance and
Model decisions, Regulatory management
Navigation) (Fund and fund management
company audit, portfolio
Fund Raising valuation, controls and
(Marketing collateral, fund process design and review, tax
structuring, audit of fund and regulatory compliance)
performance)

Buy and sell side advisory

Funds
Buyside support
(M&A, capital markets support, tax
(Due diligence – financial, tax,
structuring, regulatory compliance, Transaction business and commercial,
SPA advisory, integrated sell Advisory Services forensics and background, HR,
side advisory – building equity
IT and environmental,
story, vendor due diligence
modeling and valuations)
(VDD), structuring marketing)
Portfolio Services

Exit readiness Transition

(IPO, GAAP conversion, vendor (PMO, 100-days plan,
due diligence, value creation, transaction Integration, GAAP
investor relations, exit conversion, governance,
preparation, sale mandates, controls assessment, MIS
exit structuring) development, process advisory,
standard operating procedures,
CFO services and compliance
Tax and Legal Assurance manager)
(Tax advisory, tax accounting, (Statutory audit, tax compliance,
transfer pricing and operating risk management, corporate Value Creation
model effectiveness, tax policy governance advisory, internal
(Operational turnaround,
and litigation, regulatory audits and fraud reviews)
Performance Improvement,
compliance)
Portfolio Value Creation)

Distressed Growth
(Debt syndication, bank (Strategic options, technology
intermediation, restructuring, security, IT strategy,
working capital management, operational improvement,
cost reduction, insolvency and SCM, market entry options and
bankruptcy advisory) working capital management)

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 89
Delivering issue-based solutions to the entire PE enterprise

EY has established six distinct solutions reflecting the levels of the organization – the management company,
holistic set of challenges that PE firms face across all the funds, and their portfolio companies.

Exhibit 132

Operating model and automation Global compliance and reporting Deal origination

Alternative asset managers need to Large asset managers have The intense competition for a
drive efficiency through multi-year hundreds of non-US legal entities in limited number of deals raises
target operating models and multiple countries, and continually stakes to win for private equity
infrastructure strategies to remain create new ones – all with different firms. A proprietary investment
competitive. These align with compliance obligations. Many are approach, driven by sector
strategic growth plans by outsourced and require local insights, enables firms to
leveraging vendor and service knowledge. EY gathers the data, confidently place winning bids that
provider activities. EY defines and leverages local EY teams familiar generate appropriate returns. EY’s
monitors data analytics and key with accounting and tax laws, global origination team turns
performance indicators to annually performs data analytics to identify opportunities into actionable
assess data governance and risk trends, risks and opportunities and strategies. Our proprietary
against these target models. monitors filing requirements. knowledge and advanced analytics
help develop strategic capital
options to help firms achieve
success.

Integrated due diligence Value creation Exit readiness and IPO

Private equity firms conduct Private equity firms face increasing Private equity firms must plan exits
diligence on assets across pressure to attract fresh capital. rigorously to successfully monetize
strategic, financial, tax, operational This requires generating greater their investment during the exit
and HR issues. Firms historically investment returns and process in today’s challenging
used issue-based advisors, demonstrating a consistent track environment. Executives must
managing different parties, and record in creating value in their identify key short- and long-term
consolidating findings at the end of portfolio. EY’s value creation priorities prior to undertaking an
the process. Employing EY’s solution addresses these IPO or alternative transaction. EY
integrated diligence approach at challenges across all five stages of can advise deal teams and portfolio
the early stages of a transaction the deal life cycle, including deal companies on exit alternatives,
provides more effective, origination, diligence, inception, assess exit readiness, prepare a
comprehensive diligence on an optimization and exit strategy. business for exit/IPO, and create a
asset, giving firms a distinct value story for targeted buyers.
competitive advantage.

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 90
Exhibit 133

Focused advisory solutions for private equity backed portfolio companies

EY’s IPO readiness service is the first step in what we describe as the “IPO value
journey” and is designed to guide the client through a successful transformation from
private to public status. Achieving readiness will ensure a strong debut in the capital
IPO readiness: The markets. Getting IPO readiness right means implementing change throughout the
first step in the IPO business, organization, and the corporate culture. As a public company, the client will
value journey be subject to increased filing requirements, transparency, compliance, scrutiny by
investors and analysts and overall accountability for delivering on promises. Successful
businesses start to prepare typically 12 to 24 months before the IPO — in many cases
with an IPO readiness assessment.

Depending on objectives and business context, EY helps the client develop a

combination of short-term and long-term strategies to reduce costs, optimize process
Performance
and bring in efficiency and effectiveness across all layers of business to deliver positive
improvement
impact on EBITDA by ensuring optimal utilization of both tangible and intangible
resources.

EY helps clients build data and information strategies using various analytics tools to
Analytics:
deal with big data to address various areas of business, ranging from opportunity sizing
Generate insights to
and feasibility, operations and customer modelling, executive decision making, merger
make smarter,
acquisition and valuation. EY helps across the capability value chain ranging from
faster decisions
strategy, implementation, hosting and running the analytics functions.

Having a broader perspective on the drivers of growth in your business and finding
innovative ways to accelerate and sustain that growth can give you a competitive
Growth Navigator:
advantage. That’s why we’ve developed EY Growth Navigator™, an interactive
Achieving your
experience that uses the EY 7 Drivers of Growth to help you and your leadership team
growth ambitions
assess your business’s current and aspirational position and create a strategic road
map to help you get there.

EY identifies focused opportunities for optimizing cost and growth after full
Route to Market
assessment; designs new RTM, including different approaches for different segments
(RTM): Deliver a
(customers, regions, seasonal demand); identifies the optimal concessionaires’ model
successful strategy
considering different distribution approaches; and supports the implementation of the
for your business
RTM by providing IT specs and additional services (e.g., stock management options).

EY assists internal teams to build cyber awareness and conduct company-wide training,
as well as training of board of directors. EY supports in building regulations and
compliance requirements with audit and readiness services. EY helps transform the
Cyber security
security program and integrate information security and IT risk across the enterprise as
well as help implement globalized data protection strategies to protect information that
matters, while considering regulatory and industry compliances.

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 91
Contacts
Private Equity Services Practice

Vivek Soni Varun Kaila

Partner and National Leader Director
E: [email protected] E: [email protected]

Narendra Rohira Nachiket Deo

Partner, Transaction Tax Partner, Transaction Tax
E: [email protected] E: [email protected]

Subramaniam Krishnan Tejas Desai

Partner, Tax & Regulatory Services Partner, Tax & Regulatory Services
E: [email protected] E: [email protected]

Strategy and Transactions (SaT)

Amit Khandelwal Kuldeep Tikkha

Managing Partner Partner and National Leader
SaT Transaction Diligence
E: [email protected] E: [email protected]

Ajay Arora Neeraj Mohan

Partner and National Leader Partner and Head
Investment Banking Advisory EY Parthenon India
E: [email protected] E: [email protected]

Research and Insights

Allwyn D’Souza
Senior Manager
E: [email protected]

Brand, Marketing and Communications

Pooja Bhalla Mathur Arif Jamaal

Vice President Assistant Manager
E: [email protected] E: [email protected]
IVCA

About IVCA Contacts

The Indian Private Equity & Venture Capital Association Rajat Tandon
(IVCA), is the apex body promoting the Alternative President, IVCA
Investment Funds (AIFs) in India and promotes stable, E: [email protected]
long-term capital flow (Private Equity (PE), Venture
Capital (VC) and Angel Capital) in India. Aakriti Bamniyal
Vice President, IVCA
With leading VC/ PE firms, institutional investors, banks, E: [email protected]
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.

P E / V C A g e n d a : I n d i a T r e n d B o o k 2 0 2 2 Page 93
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