The tech sector will have a market share of at least $750 billion within a $4.5-5 trillion Indian economy by 2030, according to the IVCA-Preqin Factsheet. Private equity represents the largest segment of Indian alternative assets with assets under management (AUM) of $31 billion, up by 2.3% from a year ago, whereas venture capital is the most outstanding asset class this year for India, accounting for $26 billion in aggregate deal value to date which is more than double of last year.
India absorbed $123 billion dollars in the last two years vis-a-vis $200 billion in the last five years, annually this is 1.8% of the country’s current GDP, Renuka Ramnath, chairperson, IVCA and founder, MD and CEO, Multiples Alternate Asset Management, said. “With the coming of age of the alternative investment we expect the Alternative Asset penetration to GDP to go to at least a three percent if not a five percent. We see India’s absorptive capacity at $500 to $750 billion in the next five years. The exit options for investors have vastly improved over the past five years with a strong velocity in the PE to PE transactions, strategic exits and appetite for IPOs in the domestic and international markets,” she added.
Indian PE-VCs funds have had impressive exits this year, supported by buoyant capital markets. From January to August 2021, cumulative exits by PE-VC funds reached $31 billion. A dozen PE-VC funded companies have filed for IPOs, which are expected to hit the market in Q42021. For Ee Fai, SVP, head– research and data operations, Preqin, India’s PE-VC has proved itself to be resilient in the face of the pandemic, squeezing in a 2.1% increase in AUM in 2020. “Although fundraising slowed last year, it has risen dramatically this year together with deals and exits. Preqin understands from investors that more international LPs are prioritising India as a key emerging market, a trend helped by a climate of uncertainty elsewhere in the Asia-Pacific region,” he highlighted.
In 2020, private equity-backed buyouts in India totalled a record $19 billion, up 162% from the previous year. In the venture capital space, total deal value stands at $26 billion in 2021 to date, already more than double last year’s $11 billion. The number of venture capital deals completed may be dropping off, but their size is increasing. India is well on its way to receiving $30 billion worth of VC investments from domestic and global investors in 2021.