According to a report by industry lobby IVCA and consultancy firm EY on monthly PE/VC investment activity, investments by private equity and venture capital funds doubled to a record high of $9.5 billion in July 2021. The number stood at $4.1 billion in the year-ago period.

The report stated that the growth in the number is mainly driven by higher investor interest in the eCommerce sector. July 2021 recorded 19 large deals of over $100 million, aggregating to $8.2 billion. Additionally, the month witnessed a record in volume terms as 131 transactions were announced compared to 110 in June 2021.

Speaking on the development, Vivek Soni, EY Partner, said,

“The positive response of the equity markets to the Zomato IPO has acted as a catalyst, and almost all the leading ecommerce companies are now shoring up capital from investors (who are keen) and are making bolt-on acquisitions to bulk-up prior to hitting the capital markets.”

Vivek added that several reforms like the PLI scheme (performance-linked incentive) and scrapping of the retrospective tax law would further strengthen investor sentiment.

According to the report, pure-play investments, excluding those in real estate and infrastructure, accounted for 96% of all PE/VC investments in July 2021 at $9.1 billion. The number is more than twice the value recorded in June 2021 ($4.4 billion).

The report added that the eCommerce sector accounted for $5.8 billion of PE/VC investments, bringing the eCommerce total PE/VC investments year-to-date in 2021 to $10.5 billion. The number is more than double the previous annual high.

Despite the growth in funding, Vivek also cautioned that the downside risks include a possible pandemic resurgence, a potential spike in commodity prices, especially oil, inflation, and any hawkish action by the US Federal Reserve.

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