In today’s frenetic world, how does private equity set the pace? Learn how EY helps private equity professionals thrive in the Transformative Age The IVCA-EY monthly PE/VC roundup – 1H2021
The better the question. The better the answer. The better the world works. Our thoughts
Indian. PE/VC investment activity grew at a record setting pace throughout 1H21 and the deal pipeline indicates that this pace is only going to intensify as 2021 progresses. Both “1H21 and 2Q21 notched up life-time highs for pure-play PE/VC investments at US$21.9 billion and US$14.1 billion respectively. While, deal activity has been hectic, activity in both large deals (US$100m+) as well as mid-market deals (US$20-100 m) and growth deals continue to be the mainstay, the material increase in buyout and start-up deals are the growth drivers when we compare PE asset class data to the previous two six-month periods. In 1H21, PE/VC interest has been overweight on technology, e-commerce, financial services, pharmaceuticals, education and media and entertainment, sectors which have either gained on account of COVID or have demonstrated resilience to or a quick bounce back from the pandemic and its aftereffects. Conversely, PE/VC investments in infrastructure and real estate asset classes and the retail and consumer products sector have shown a material decline compared to the previous six-month period.
PE/VC exit activity is also on track to notch up a record setting year. With ~U$22.5 billion of exits in the first six months and several large deals in pipeline, 2021 is expected to materially eclipse 2018’s high of US$27 billion. Large, multi-billion dollar exits to strategic buyers is expected to remain the main driver, while exits via secondary deals, open market sale of listed positions as well as IPOs are also expected to remain strong. A positive response by the equity markets to the Zomato IPO and the soon to follow IPOs by other VC funded new age unicorns is expected to catalyze even more investment and exit activity in the Indian start-up ecosystem.
Although fund raising by Indian focused funds dipped materially when compared to the previous six-month period, we are projecting a strong bounce back as the forecasted robust exits fuel Limited Partner (LP) returns and sentiments.
Downside risks to watch for include, a possible pandemic resurgence, inflation and the Feds response to it and a potential spike in commodity prices, especially oil.
Page 2 19 July 2021 EY analysis of VCCEdge data How can you cut cost and still accelerate growth?
Find out how EY’s insights can help companies grow from cash poor to cash rich Half-yearly trend analysis – 1H2021
The better the question. The better the answer. The better the world works. Key trends: half-yearly
Investments
► On a half-yearly basis, PE/VC investments in 1H21 recorded a 45% increase y-o-y, but declined by 9% sequentially (US$26.9 billion in 1H21 vs. US$18.5 billion in 1H20 and US$29.1 billion in 2H20). In terms of number of deals, 1H21 recorded an increase of 18% compared to 1H20 and 7% compared to 2H20 (518 deals in 1H21 vs. 440 deals in 1H20 and 483 deals in 2H20). The y-o-y increase in the value of PE/VC investments in 1H21 appears impressive primarily on account of a lower base effect as 1H20 was significantly affected by the uncertainties that came along with the onset of the COVID-19 pandemic and the strict nationwide lockdown that ensued thereafter.
► Pure play PE/VC investments (excluding real estate and infrastructure sectors) recorded its highest ever value of investments in 1H21, which is 32% higher compared to 1H20 and 5% higher than 2H20 (US$21.9 billion in 1H21 vs. US$16.5 billion in 1H20 vs. US$20.9 billion in 2H20).
► The improvement in 1H21 over 1H20 was mainly on account of higher number of large deals. 1H21 recorded 64 large deals aggregating to US$19.1 billion (compared to 30 large deals aggregating to US$13.6 billion in 1H20), However, the value of large deals in 1H21 were 20% lower than 2H20 that had recorded 55 large deals aggregating to US$24.1 billion. The largest deals in 1H21 included Blackstone along with ADIA, UC Investments and GIC acquiring a majority stake (~75%) in Mphasis for around US$2.8 billion. The deal involves an older fund of Blackstone (Blackstone, Blackstone Capital Partners VI) selling its ~55% stake in Mphasis to Blackstone Capital Partners Asia and Blackstone Capital Partners VIII while also announcing an open offer to acquire additional 26% stake, taking the combined planned purchase consideration to around US$2.8 billion followed by a group of investors including QIA, GIC, Goldman Sachs, Naspers and others investing ~US$800 million in Swiggy.
Page 4 19 July 2021 EY analysis of VCCEdge data Key trends: half-yearly
Investments
► Growth deals were the highest with US$11 billion invested across 138 deals (US$13.1 billion across 95 deals in 1H20 and US$12.3 billion across 93 deals in 2H20), followed by buyouts, which was the most impacted deal strategy post the onset of the COVID-19 pandemic in 2020. Buyouts recorded a nine-fold y-o-y increase to US$7.9 billion across 28 deals (US$885 million across 15 deals in 1H20 and US$10.9 billion across 28 deals in 2H20).
► Start-up investments more than doubled to US$5.9 billion across 280 deals in 1H21 on a y-o-y basis (US$2.2 billion across 261 deals in 1H20 and US$2.5 billion across 295 deals in 2H20). PIPE investments recorded US$1.2 billion across 62 deals in 1H21 (US$990 million across 30 deals in 1H20 and US$2.1 billion across 32 deals in 2H20). Credit investments recorded US$836 million in 1H21 compared to US$1.3 billion in 1H20 and US$1.2 billion in 2H20.
► From a sector perspective, technology was at the top (US$5.2 billion across 67 deals), highest ever value of investments in the sector, surpassing the previous high recorded in 2019 (full year) of US$4.3 billion by 22% and is 59% higher than investments recorded in 2020 (full year). E-commerce was second in line with US$4.8 billion invested across 83 deals, 72% higher than US$2.8 billion across 125 deals in 2020 (full year) and is almost at par with the all time high of US$4.9 billion recorded by the sector in 2017 (full year) followed by financial services sector (US$3.6 billion across 90 deals, 81% y-o-y increase). Media and entertainment is another sector that has recorded all-time high numbers of US$1.3 billion across 25 deals, 56% higher than previous all-time high of US$809 million recorded in 2020 (full year).
Page 5 19 July 2021 EY analysis of VCCEdge data Key trends: half-yearly
Exits
► On a year-on-year (y-o-y) basis, exits recorded more than a seven fold increase in terms of value in 1H21 compared to 1H20 and 2H20 (US$22.5 billion vs. US$3 billion in 1H20 and US$3.1 billion in 2H20) and more than 3.7 times the value recorded in entire 2020. This is also the highest half-yearly value of exits and second highest on an annual basis. The number of exits in 1H21(118 exits) were 82% higher compared to 1H20 (65 exits) and 37% higher compared to 2H20 (86 deals).
► Exits via strategic sale were the highest with US$12.7 billion recorded across 29 deals, accounting for 57% of all exits in 1H21 which is mainly on account of the large GlobalLogic-Hitachi deal worth US$8.6 billion. Next in line were exits via secondary sale (sale to other PE funds) at US$4.5 billion (31 deals) that recorded the highest ever half-yearly value and four times the value recorded in entire 2020. Open market exits recorded 38 deals worth US$2.9 billion. PE-backed IPOs too recorded highest ever half-yearly value of exits in 1H21 and second highest in terms of number of IPOs, that saw PE funds garner US$1.6 billion in sale proceeds across13 IPOs.
► From a sector perspective, technology sector recorded the highest value of exits in 1H21 (US$11.8 billion across 11 deals) which is more than the exits recorded by the sector in the preceding eight years combined. This is mainly on account of Hitachi’s buyout of the stake held by CPPIB and Partners Group in GlobalLogic for US$8.6 billion. Financial services was the next big sector with 22 exits worth US$2.5 billion.
► Apart from GlobalLogic, the second largest exit too was from the technology sector where an older fund of Blackstone (Blackstone, Blackstone Capital Partners VI) sold its ~55% stake in Mphasis to Blackstone Capital Partners Asia and Blackstone Capital Partners VIII fund for ~US$2 billion.
► 1H21 has recorded four US$1 billion plus exits which is same as that recorded in the previous three years combined. Large exits (value greater than US$100m) accounted for US$20.8 billion in value across 24 exits in 1H21 compared to 12 such exits worth US$3.8 billion in 2020 (full year), 32 exits worth US$8.7 billion in 2019 (full year) and 32 exits worth US$25 billion in 2018 (full year).
Page 6 19 July 2021 EY analysis of VCCEdge data Key trends: half-yearly
Fundraise
► 1H21 recorded US$2.8 billion in fundraises, 72% higher compared to 1H20 (US$1.6 billion) and 58% lower compared to 2H20 (US$6.6 billion). The largest fundraise in 1H21 saw Kotak Real Estate fund raise US$380 million for its 11th fund for investments across both early and late-stage real estate projects in the residential, commercial, retail, warehousing and hospitality sectors.
Page 7 19 July 2021 EY analysis of VCCEdge data PE/VC half-yearly headline trends: investments
US$m Total PE/VC investments # 531 30,000 499 518 600 25,000 440 483 500 376 391 20,000 400 294 302 15,000 18,511 300 26,938 29,067 26,916 10,000 19,453 20,687 200 15,901 17,960 5,000 10,275 9,567 6,361 100 - 1,371 - 1H2017 2H2017 1H2018 2H2018 1H2019 2H2019 1H2020 2H2020 1H2021
Value (US$m) # of deals Investment in Jio Platforms Investment in Reliance Retail
US$m PE/VC investments split across asset classes 30,000 3,307 25,000 2,005 8,348 4,858 3,046 20,000 1,113 3,348 5,496 1,615 1,333 3,276 390 15,000 2,312 2,315 2,868 3,682 1,560 10,000 20,903 21,865 1,373 14,534 15,314 16,505 13,791 12,323 5,000 10,886 7,342 - 1H2017 2H2017 1H2018 2H2018 1H2019 2H2019 1H2020 2H2020 1H2021
PE/VC investment (other sectors) (US$m) Real estate (US$m) Infrastructure (US$m)
Real estate includes deals across real estate (residential and commercial), hospitality and construction Infrastructure includes deals across roads, ports, railways, power and utilities, renewables and telecom infrastructure
Page 8 19 July 2021 EY analysis of VCCEdge data PE/VC half-yearly headline trends: exits
US$m Total PE/VC exits # 131 129 140 20,000 104 118 120 80 86 100 15,000 72 77 65 80 22,453 10,000 20,430 60 40 5,000 8,339 6,612 7,271 20 4,714 3,850 2,955 3,053 - - 1H2017 2H2017 1H2018 2H2018 1H2019 2H2019 1H2020 2H2020 1H2021
Value (US$m) # of exits
US$m PE/VC exits split across asset classes
30,000
25,000 9 2,551 20,000 367 591
15,000
10,000 435 20,053 19,311 7 511 1,079 632 5,000 56 344 236 295 7,392 89 2 293 6,633 302 653 4,363 5,189 3,321 2,565 2,397 - 1H2017 2H2017 1H2018 2H2018 1H2019 2H2019 1H2020 2H2020 1H2021
Other sectors (US$m) Real estate (US$m) Infrastructure (US$m)
Real estate includes deals across real estate (residential and commercial), hospitality and construction Infrastructure includes deals across roads, ports, railways, power and utilities, renewables and telecom infrastructure
Page 9 19 July 2021 EY analysis of VCCEdge data PE/VC half-yearly headline trends: fundraise
US$m Fundraise #
7,000 35 40 6,000 29 35 28 27 5,000 24 23 24 30 20 25 4,000 18 20 3,000 6,143 6,638 5,087 5,543 15 2,000 3,768 10 3,005 2,761 1,000 2,006 1,601 5 - - 1H2017 2H2017 1H2018 2H2018 1H2019 2H2019 1H2020 2H2020 1H2021
Total funds raised (US$m) Total # of funds raised
Page 10 19 July 2021 EY analysis of VCCEdge data Investments (excluding infrastructure and real estate)
Total investments (US$m) # of deals
1H2021 21,865 1H2021 462 2H2020 20,903 2H2020 453 1H2020 16,505 1H2020 410
Deal type US$m Deal type # 564 35 Credit investment 1,118 Credit investment 32 513 33 5,456 14 Buyout 4,213 Buyout 15 407 8 832 25 PIPE* 1,866 PIPE* 30 925 28 5,712 275 Start-up/Early stage 2,472 Start-up/Early stage 292 2,208 251 9,301 113 Expansion/Growth 11,234 Expansion/Growth 84 12,453 90
Deal size US$m Deal size # 15,615 49 >US$100m 16,481 >US$100m 43 12,181 24 2,401 31 US$50m-US$100m 2,125 US$50m-US$100m 27 1,616 23 2,354 70 US$20m-US$50m 1,110 US$20m-US$50m 36 1,450 43 737 51 US$10m-US$20m 436 US$10m-US$20m 30 566 37 758 209 * PIPE: Private investment in public equity Note: Deal value not available on 81 out of 410 deals in 1H2020 , 69 out of 453 deals in 2H2020 and 52 out of 462 deals in 1H2021 Page 11 19 July 2021 EY analysis of VCCEdge data Investments: infrastructure Total investments (US$m) # of deals 1H2021 2,005 1H2021 23 2H2020 3,307 2H2020 12 1H2020 1,615 1H2020 17 Deal type US$m Deal type # 84 3 Credit investment 15 Credit investment 1 832 6 1,202 6 Buyout 2,345 Buyout 7 331 5 286 4 PIPE* PIPE* - 1 72 2 Start-up/Early stage 19 Start-up/Early stage 1 7 2 361 8 Expansion/Growth 928 Expansion/Growth 3 446 3 Deal size US$m Deal size # 1,510 7 >US$100m 3,254 >US$100m 7 1,435 6 338 4 US$50m-US$100m US$50m-US$100m 153 5 US$20m-US$50m US$20m-US$50m 163 4 US$10m-US$20m 52 US$10m-US$20m 3 4 3 * PIPE: Private investment in public equity Note: Deal value not available on 4 out of 17 deals in 1H2020, 1 out of 12 deals in 2H2020, and 4 out of 23 deals in 1H2021 Page 12 19 July 2021 EY analysis of VCCEdge data Investments: real estate Total investments (US$m) # of deals 1H2021 3,046 1H2021 33 2H2020 4,858 2H2020 18 1H2020 390 1H2020 13 Deal type US$m Deal type # 187 4 Credit investment 81 Credit investment 2 1,267 8 Buyout 4,378 Buyout 6 147 2 110 1 PIPE* 210 PIPE* 2 65 1 122 3 Start-up/Early stage 8 Start-up/Early stage 2 20 8 1,359 17 Expansion/Growth 179 Expansion/Growth 6 158 2 Deal size US$m Deal size # 1,971 8 >US$100m 4,385 >US$100m 5 782 11 US$50m-US$100m 431 US$50m-US$100m 6 370 5 231 8 US$20m-US$50m US$20m-US$50m 40 3 US$10m-US$20m 27 US$10m-US$20m 2 21 3 * PIPE: Private investment in public equity Note: Deal value not available on 2 out of 13 deals in 1H2020 and 2 out of 13 deals in 2H2020 Page 13 19 July 2021 EY analysis of VCCEdge data Investments: sector-wise Top sectors by value (US$m) Top sectors by # of deals 5,204 90 Technology 2,752 Financial services 71 520 75 4,783 83 E-commerce 1,918 E-commerce 65 859 60 3,617 67 Financial services 2,842 Technology 79 1,997 60 3,046 44 Real estate 4,858 Education 42 390 29 2,005 33 Infrastructure 3,307 Real estate 18 1,615 13 1,570 32 Pharmaceuticals 1,889 Retail and consumer products 28 1,092 18 1,401 29 Education 1,405 Healthcare 23 739 25 1,260 25 Media and entertainment 733 Media and entertainment 32 76 28 871 23 Retail and consumer products 6,591 Infrastructure 12 71 17 813 20 Healthcare 252 Pharmaceuticals 19 414 17 2,345 72 Others 2,521 Others 94 10,738 98 1H2021 2H2020 1H2020 * In 1H2020, others includes US$9 billion invested in Telecom sector, mainly in Jio Platforms Page 14 19 July 2021 EY analysis of VCCEdge data Top PE/VC investments Top PE/VC investments excluding infrastructure and real estate in 1H2021 Company PE investors Sector Stage US$m Stake (%) Mphasis Limited Blackstone, ADIA, UC Invest, GIC Technology Buyout ~2,800 ~ 75 Bundl Technologies Private Limited Accel, Falcon Edge, Amansa, Carmignac, E-commerce Growth capital 800 16 (Swiggy) QIA, GIC and others Infogain Corporation Apax Partners Technology Buyout ~800 100 Retail and consumer Vini Cosmetics Private Limited KKR, Westbridge Capital Buyout 648 56 products India Quotient, Lightspeed, Tiger Global Mohalla Tech Private Limited (Sharechat) Media and entertainment Start-up 502 NA and others MC Global Edtech, B Capital, Baron Global, Think and Learn Private Limited (Byju’s) Education Growth capital 460 NA XN Exponent and others UBS, Blackstone, ADQ, Phoenix Rising, IIFL Think and Learn Private Limited (Byju’s) Education Growth capital 400 2.4 and others Sporta Technologies Private Limited Steadview Capital, Tiger Global, TPG, Media and entertainment Growth capital 400 NA (Dream 11) ChrysCapital, Falcon Edge and others Zydus Animal Health and Investments Pharmaceuticals Multiples, CPPIB Buyout 400 100 Limited Altico Capital India Limited Ares Management Financial services Buyout 380 100 API Holdings Private Limited (Pharmeasy) TPG, Temasek, Naspers E-commerce Start-up 350 7 Aragen Life Sciences Private Limited Goldman Sachs Pharmaceuticals Growth capital 333 33 YV Capital, D1 Capital, Steadview Capital, Zomato Limited E-commerce Growth capital 319 NA MVP Fund BrainBees Solutions Private Limited ChrysCapital, TPG, PremjiInvest E-commerce Growth capital 313 NA (FirstCry) TPG, Temasek, B Capital, Kotak PE and API Holdings Private Limited (Pharmeasy) E-commerce Start-up 300 NA others Page 15 19 July 2021 EY analysis of VCCEdge data Top PE/VC investments Top infrastructure and real estate investments in 1H2021 Company PE investors Sector Stage US$m Stake (%) Embassy Industrial Parks Private Limited Blackstone Real estate Buyout 715 100 Engie SA-Indian Solar Energy Assets Edelweiss and Sekura Energy Infrastructure Buyout 550 75 RMZ Corp, construction projects JV CPPIB Real estate Growth capital 340 NA 2 Solar Projects of Fortum India Actis Infrastructure Buyout 332 100 Phoenix Mills Limited, Investment Platform GIC Real estate Growth capital 208 36 Gardencity Realty, 1.65 M sq ft at Ascendas Property Fund Real estate Buyout 197 100 Bengaluru IT park Phoenix Group’s 2 IT-SEZ projects in Varde Partners Real estate Credit investment 156 NA Hyderabad Sterlite Power Transmission Limited, 5 AMP Capital Investors Infrastructure Buyout 150 50 energy transmission projects Phoenix's IT-SEZ,1.1 M sq. ft GIC Real estate Growth capital 143 NA IndInfravit Trust CPPIB Infrastructure Growth capital 135 16 The Norwegian Investment Fund for Fourth Partner Energy Private Limited Infrastructure Growth capital 125 NA Developing Countries, The Rise Fund Godrej Properties Limited GIC Real estate PIPE 110 2 Adani Ports and Special Economic Zone Warburg Pincus Infrastructure PIPE 109 0.5 Limited PowerGrid InvIT CPPIB Infrastructure PIPE 108 NA Real estate includes deals across real estate (residential and commercial), hospitality and construction Infrastructure includes deals across roads, ports, railways, power and utilities, renewables and telecom infrastructure Page 16 19 July 2021 EY analysis of VCCEdge data Exits: half-yearly analysis Total exits (US$m) # of deals 1H2021 22,453 1H2021 118 2H2020 3,053 2H2020 86 1H2020 2,955 1H2020 65 Exit type US$m Exit type # 2,943 38 Open market 1,066 Open market 37 1,355 30 4,545 31 Secondary 868 Secondary 11 45 9 12,729 29 Strategic 627 Strategic 25 399 19 632 7 Buyback 340 Buyback 6 64 5 1,605 13 IPO 152 IPO 7 1,093 2 Top sectors US$m Top sectors # 11,812 22 Technology 710 Financial services 14 137 26 2,508 14 Financial services 198 E-commerce 8 1,978 1 2,551 12 Infrastructure 2 Media and entertainment 5 89 4 1,405 11 E-commerce 101 Technology 8 7 2 779 10 Automotive 10 Retail and consumer… 4 - 3 680 5 Retail and consumer products 359 Infrastructure 1 - 3 2,718 44 Others 1,673 Others 46 744 26 Page 17 19 July 2021 EY analysis of VCCEdge data Top exits Top exits in 1H2021 Company Sector Sellers Buyer Exit type US$m Stake (%) GlobalLogic Incorporated Technology CPPIB, Partners Group Hitachi Strategic ~8,640 90 MphasiS Limited Technology Blackstone Blackstone’s new fund Secondary ~2,000 55 Adani Green Energy SB Energy Holding Power and utilities Softbank Strategic ~1,760 80 Limited BigBasket E-Commerce Alibaba, IFC and Abraaj TATA Group Strategic 1,000 50 Adani Ports and Special Gangavaram Port Limited Infrastructure Warburg Pincus Strategic 761 32 Economic Zone Limited Sona BLW Precision Forgings Automotive Blackstone NA IPO 719 33 Limited SBI Cards and Payment Services Financial Services Carlyle NA Open market 649 5 Limited SBI Life Insurance Company Financial Services Carlyle NA Open market 531 4 Limited Infogain Corporation Technology ChrysCapital Apax Secondary 500 70 Embassy Industrial Parks Private Warburg Pincus, Embassy Real Estate Blackstone Secondary 500 70 Limited Property Developments Media & Bharti Telemedia Limited Warburg Pincus Bharti Airtel Limited Buyback 430 20 Entertainment Aakash Educational Services Think and Learn Private Education Blackstone Strategic 375 38 Limited Limited (Byju’s) Alipay, Sunlight Fund, Nexus, YV Capital, D1 Capital, Zomato Limited E-Commerce Secondary 319 NA Sequoia, Blume and others Steadview, MVP Fund TaskUs Incorporated Technology Blackstone NA IPO 300 12 Page 18 19 July 2021 EY analysis of VCCEdge data Fundraise Top fundraise in 1H2021 Status Fund US$m Strategy Raised Kotak Real Estate Fund XI 380 Early and late-stage real estate projects (debt funding) Raised Godrej Fund Management - Office Platform 250 Office buildings Raised TVS Shriram Growth Fund 3 212 Sector agnostic Raised Sequoia Capital Seed Fund - II 195 Early stage start-ups Raised Alteria Capital 179 Venture debt Raised Tata Capital Growth Fund II 168 Strategic services, urbanisation and discrete manufacturing Raised Trifecta Capital - Second Fund 140 Venture debt – start-ups Raised Fireside Ventures - Fund II 118 Early stage – consumer Announced Edelweiss Financial Services 1,500 Distressed assets Announced Actis Energy 5 LP fund 850 Solar and wind power parks Announced Kotak Investment Advisors 800 ESG compliant infrastructure Announced Edelweiss Pre IPO Fund 700 Pre IPO and late stage companies Announced Nexus Venture Partners Sixth Fund 660 Early-stage start-ups - Sector agnostics Page 19 19 July 2021 EY analysis of VCCEdge data Spotlight: the growing importance of ESG in investing Investors are entering a new age of ESG maturity Traditional Investor ESG Risk Mitigator ESG Opportunity Seeker ESG Investor Both Financial first, environmental and social (E&S) E&S Impact Value Created Financial only financial, E&S considered prioritized impacts Look for assets in sectors Approach to ESG Focus on screening for non- Look for assets only in sectors Passive with positive ESG impact screening for assets compliant assets/ sectors with positive ESG impact (along-side others) No specific investment Thematic Investment Approach Dedicated ESG Impact Fund fund Fund Involvement in ESG Push for Actively involved such as None Focus on risks and divest from certain sectors during ownership Impact capacity building ESG Impact Limited, usually includes some Track some Specific performance indicators to measure None Measurement KPIs focused on risks ESG KPIs ESG impact in addition to financial returns Financial considerations Social/ Environmental considerations Page 21 19 July 2021 EY analysis of VCCEdge data ESG Imperatives for General Partners (GPs) Demand from LPs are increasingly becoming ESG-savvy. According to a recent Intertrust Limited Partners survey of 150 PE fund managers, an overwhelming majority (88 percent) (LPs) said they plan to increase their focus on ESG Several meta-studies, including one conducted by Deutsche Asset Management and the University of Hamburg, show a strong positive Evidence of correlation between ESG strategies and financial performance, with the financial relevance strongest positive correlations identified for businesses operating in developing markets. Regulatory activity is increasing globally, including the EU’s Sustainable Regulation of ESG Finance Disclosure Regulation (SFDR) and EU taxonomy for sustainable disclosure activities. Disclosure are required on how ESG risks are integrated into investment decisions and their impact on returns. A systematic approach of integrating ESG into business operations and Opportunity for processes can help safeguard a company’s long-term success as it takes mitigating risk and steps to mitigate these risks. Addressing ESG concerns enhances value creation operational and performance effectiveness creating long term value. New study reveals rise of ESG among private equity GPs - yet obstacles remain - Intertrust Group Page 22 19 July 2021 EY analysis of VCCEdge data Some of the Global PE majors already have ESG at the heart of their operations Has an Has Principles for American Investment articulated annual Responsible Council’s Guidelines ESG public Investing (PRI) for Responsible Dedicated impact fund PE firm framework report signatory Investment or pool Advent International Corp. X Apollo Impact Investing Apollo Global Management Inc. X X X Fund Ares Management Corp. X X1 X The Blackstone Group Inc. X X X Carlyle Renewable & The Carlyle Group X X X Sustainable Energy Fund EQT Partners AB X X X KKR & Co. Inc. X X X X KKR Global Impact Fund TPG Capital Management LP X X X X The Rise Fund I and II Vision Fund X Warburg Pincus LLC X X X X 1Beginning in 2021, Ares will publish an annual Corporate Responsibility Report Source: EY Research Page 23 19 July 2021 EY analysis of VCCEdge data Material aspects for investors Environmental – sector specific (illustrative) Environmental aspects can vary depending on the sector in which a company is operating. Climate change and emissions caused due to operations, energy efficiency, optimum utilization of raw materials and water resources, waste disposal, and biodiversity protection are few of the key indicators that determine a company's approach towards environment conservation. Sector Focus Area Sector Focus Area ► Emissions from Transmission ► Toxic Emissions and Waste ► and Distribution Pharmaceuticals ► Climate Strategy Gas Utilities ► Biodiversity CO2 ► Operational Eco-Efficiency ► Toxic Emissions and Waste ► Sustainable Forestry Practices Transportation ► Fuel Efficiency ► Biodiversity and Paper and Forest ► Climate Strategy ► Operational Eco Efficiency Transportation Products ► Biodiversity ► Water Related Risks Industry ► Product Stewardship ► Packaging Material and Waste ► Mineral Waste Management ► Raw Material Sourcing ► Climate Strategy FMCG ► Product Carbon Footprint Metals and Mining ► Operational Eco-Efficiency ► Water Stress ► Water Related Risks ► Toxic Emissions and Waste Source: S&P 2021 Yearbook, MSCI Materiality Map Page 24 19 July 2021 EY analysis of VCCEdge data Material aspects for investors Social and governance – sector agnostic (illustrative) Social aspects considers how a company manages its Governance aspects considers set of rules or relationship with internal social factors (such as principles defining rights, responsibilities and human capital development, human rights and living expectations between different stakeholders in the wage) and external social factors governance of corporations. Social Material Issues Governance Material Issues ► Financial Inclusion ► Human Capital development ► Talent Attraction and ► Codes of Business Conduct Retention ► Corporate Governance ► Privacy and Data Security ► Customer Relationship ► Access to finance ► Management ► Consumer Financial ► Risk & Crisis Management Protection ► Sustainable Finance ► Insuring health and demographic risk Source: S&P 2021 Yearbook, MSCI Materiality Map Page 25 19 July 2021 EY analysis of VCCEdge data Investor preferences (illustrative) Investors prefer firms that demonstrate ESG as beyond a compliance Investors are extensively using exclusionary measure and actually integrate it in their ethos and create long-term value for their stakeholders. screening as a method to sustainable investing. Exclusionary screening is often used when investors want to Select Examples remove investable options basis on their values or standards or reputation. PE Firm ESG focus ► Firms incorporating ESG and CSR initiatives into its Common exclusionary / negative screens include: value-creation plans, with the specific focus on customer loyalty, human capital, communities, CVC Capital environment and governance. Partners ► CVC undertakes annual assessments of its portfolio companies to demonstrate how ESG maturity has improved under its ownership. ► Created Global Impact Fund in 2018 to invest in Pornography Weapons Nuclear Energy Tobacco leading companies where financial performance and positive societal impact are intrinsically KKR aligned. ► Recognizes portfolio companies that provide innovative, environmentally beneficial solutions through Eco-Innovation Awards Gambling Alcohol Animal Testing ► Launched two ESG-linked subscription credit facilities in 2020 worth €5 billion. Companies EQT receive better financing terms if they perform well against a set of ESG indicators. keynote-interview-esg-in-value-creation.pdf (cvc.com) KKR Supplementary ESG Disclosures September 2020 (kkresg.com) EQT Launches Largest Ever ESG-linked Fund Bridge Facility - ESG Today Page 26 19 July 2021 EY analysis of VCCEdge data ESG Due Diligence Checklist Illustrative S.No General E&S Management S.No Anti-corruption management due diligence (DD) 1 E&S Policy 1 Pre Deal Screening 2 Identification of Risks and Opportunities 2 Risk Profile 3 Management Programs 3 Written Procedures 4 Development of internal capacity and accountability mechanisms 4 Responsible Officer 5 Emergency Preparedness and Response 5 Associates – group companies Stakeholder engagement program (SEP) and grievance 6 6 Suppliers and purchasers mechanism 7 Monitoring and review 7 Communication and training Labour and Working Conditions 8 Employment Rights Human resources (HR) and International Labour Organization 9 Gifts Policy 8 (ILO) core labour standards. 10 Previous Incidents 9 Freedom of association & collective bargaining 11 Records 10 Occupational Health and Safety 12 Government Reporting 11 Worker Productivity Skills and Development 13 Best Practice Guidelines 12 Retrenchment- reducing the number of employees 14 Internal Auditors 13 Contractors, third parties, supply chains and temporary workers Governance and 15 External Auditors Environmental Pollution prevention and resource use efficiency Business Whistleblower Management and Social 14 Reducing waste and preventing pollution Integrity 16 Whistleblowing Employees Checklist Topics 15 Energy and Water Use Efficiency Checklist Topics 16 Greenhouse Gas Emissions and Climate Change 17 Whistleblowing Third Parties 17 Pesticides and other Agrochemicals 18 Responsible officer 18 Contaminated land or land with liabilities 19 Associates – group companies Community health, safety and security 20 Communication and training 20 Community health, safety and security 21 Employment Rights 21 Stakeholder engagement and consultation 22 Previous Incidents 22 Security Personnel 23 Records Land acquisition and economic displacement 24 Internal Auditors Acquisition of land which has or will result in the involuntary 23 Corporate Governance Management resettlement or economic displacement of people. 25 Commitment to Corporate Governance (CG) Biodiversity conservation and natural resources management 26 Board structure and role 24 The value of biodiversity and the risks to biodiversity 25 Management of ecosystem services 27 Directors Indigenous People 28 Board meetings 27 Protection of the rights of Indigenous Peoples 29 Board Committees Cultural heritage 30 Minority Shareholders 28 Protection of cultural heritage 31 Transparency and Disclosure Source: CDC ESG Checklist Page 27 19 July 2021 EY analysis of VCCEdge data EY’s Climate Change And Sustainability Practice Shailesh Tyagi Chaitanya Kalia Climate Change & Sustainability National Leader - Climate Change & Services, India Sustainability Services, India Partner – ESG and Responsible Partner - EY India Investment - EY India T: +91 98201 08838 T: +91 98190 28366 E: [email protected] E: [email protected] Page 28 19 July 2021 EY analysis of VCCEdge data Spotlight PE/VC investment trend in start-ups (1H2021) The better the question. The better the answer. The better the world works. Spotlight: key trends start-up investments ► On a y-o-y basis, PE/VC investments in start-ups more than doubled to US$5.9 billion across 280 deals in 1H21 (US$2.2 billion across 261 deals in 1H20 and US$2.5 billion across 295 deals in 2H20). This is the highest ever half-yearly value recorded by start-up investments on the back of large deals (value greater than US$100m). 1H21 recorded highest ever number of large start-ups deals (13 large deals worth US$2.9 billion) in any year. As a result, the average deal size was also significantly larger in 1H21 at ~US$24 million which is double the average deal size in 2020 (full year) as well as the largest ever average deal size for start-up investments. ► Most major sectors recorded significant increase in start-up investments in 1H21. E-commerce with US$2.1 billion invested across 53 deals was the largest sector for start-up investments in 1H21, followed by financial services with US$1.1 billion invested across 48 deals, media and entertainment with US$675 million invested across 17 deals and technology with US$642 million invested across 46 deals. E-commerce investments in 1H21 were more than twice the value invested in entire 2020 (US$1 billion). Page 30 19 July 2021 EY analysis of VCCEdge data Spotlight: start-up investments US$m Start-up PE/VC investments # 6,000 313 400 5,000 293 295 280 300 4,000 5,184 208 3,000 147 164 169 261 5,905 200 2,000 4,023 2,329 2,457 2,718 2,235 2,499 100 1,000 1,176 - 0 1H2017 2H2017 1H2018 2H2018 1H2019 2H2019 1H2020 2H2020 1H2021 Value Count Deal size US$m Deal size # 2,911 13 >US$100m 605 >US$100m 4 484 4 965 12 US$50m-US$100m 576 US$50m-US$100m 7 344 5 1,084 33 US$20m-US$50m 526 US$20m-US$50m 17 707 21 424 30 US$10m-US$20m 288 US$10m-US$20m 20 247 16 522 157 1H2021 2H2020 1H2020 Note: Deal value not available on 68 out of 261 deals in 1H2020, 60 out of 295 deals in 2H2020, 35 out of 280 deals in 1H2021 Page 31 19 July 2021 EY analysis of VCCEdge data Spotlight: start-up investments sector-wise Top sectors by value (US$m) Top sectors by # of deals 2,099 53 E-commerce 643 E-commerce 44 395 35 1,078 48 Financial services 543 Financial services 37 668 40 675 46 Media and entertainment 229 Technology 66 49 49 642 36 Technology 331 Education 29 377 22 461 20 Education 322 Retail and consumer products 11 209 11 225 18 Food and agriculture 36 Healthcare 18 86 16 179 17 Healthcare 23 Media and entertainment 24 214 26 148 10 Logistics 144 Business and professional services 18 95 11 122 9 Real estate 8 Food and agriculture 22 20 16 98 5 Business and professional services 28 Logistics 12 39 7 180 18 Others 192 Others 14 84 28 1H2021 2H2020 1H2020 Page 32 19 July 2021 EY analysis of VCCEdge data Spotlight: top PE/VC investments in start-ups Top PE/VC investments in start-ups – 1H2021 Company PE investors Sector US$m Stake (%) Mohalla Tech Private Limited (Sharechat) India Quotient, Lightspeed, Tiger Global and others Media and entertainment 502 NA API Holdings Private Limited (Pharmeasy) TPG Capital, Temasek, Naspers E-commerce 350 7 SoftBank, Shunwei Capital, Venture Highway and Meesho Incorporated E-commerce 300 NA others API Holdings Private Limited (Pharmeasy) TPG, Temasek, B Capital, Kotak PE and others E-commerce 300 NA Altimeter Capital, GGV Capital, DST Global, Trustroot Internet Private Limited (Udaan) E-commerce 280 NA Lightspeed, and others RTP Global, Tiger Global, DST Global, Coatue Dreamplug Technologies Private Limited (CRED) Management, Falcon Edge, Insight Venture and Financial services 215 10 others Browserstack Software Private Limited (Percy) Accel, Bond Capital, Insight Venture Technology 200 5 Multiples, Temasek, 3one4 Capital, Bertelsmann and Delightful Gourmet Private Limited (Licious) Food and agriculture 192 27 others UpGrad Education Private Limited Unilazer Ventures, Temasek Education 130 NA Zetwerk Manufacturing Businesses Private Limited Sequoia, KAE Capital, Greenoaks Capital, Lightspeed E-commerce 120 NA Falcon Edge, Matrix Partners, Creation Investments, OFB Tech Private Limited Financial services 110 14 Norwest Venture Partners Insight Venture, Ribbit Capital, Steadview Capital, Resilient Innovations Private Limited Financial services 108 12 Sequoia, Coatue and others Microsoft's Venture Fund, Tiger Global, Steadview Innovaccer Inc. Healthcare 105 NA Capital, B Capital Fund and others API Holdings Private Limited (Pharmeasy) CDPQ E-commerce 100 2 Evolvence, Accel, Tiger Global, Nexus Ventures and Hella Infra Market Limited E-commerce 100 10 others Page 33 19 July 2021 EY analysis of VCCEdge data How can you cut cost and still accelerate growth? Find out how EY’s insights can help companies grow from cash poor to cash rich Quarterly trend analysis – 2Q2021 The better the question. The better the answer. The better the world works. Key trends: quarterly Investments ► On a quarterly basis, PE/VC investments in 2Q21 increased by 26% y-o-y and 67% sequentially (US$16.9 billion in 2Q21 vs. US$13.5 billion in 2Q20 and US$10 billion in 1Q21). In terms of number of deals, 2Q21 recorded an increase of 12% compared to 2Q20 and a 12% decline compared to 1Q21 (243 deals in 2Q21 vs. 217 deals in 2Q20 and 275 deals in 1Q21). ► Pure play PE/VC investments (excluding real estate and infrastructure sectors) recorded its highest ever value of investments in 2Q21, which is 10% higher compared to 2H20 and 80% higher than 1Q21 (US$14.1 billion in 1H21 vs. US$12.8 billion in 2Q20 vs. US$7.8 billion in 1Q21). ► The growth in 2Q21 is driven by a revival in buyouts and start-up investments. In terms of value, buyouts grew more than 10 fold in 2Q21 over last year and almost four times compared to previous quarter (US$6.3 billion in 2Q21 vs. US$592 million in 2Q20 and US$1.3 billion in 1Q21). Buyouts, which was the most impacted deal strategy post the onset of the COVID-19 pandemic in 1Q20, recorded 17 deals in 2Q21 compared to 7 in 2Q20 and 11 in 1Q21. Value of start-up investments in 2Q21 were 3.8 times higher compared to 2Q20 and 21% higher compared to 1Q21, this despite 2Q21 recording fewer number of start-up deals compared to 2Q20 and 1Q21, an indication of increasing ticket size of start-up deals (114 deals in 2Q21 vs. 126 deals in 2Q20 and 166 deals in 1Q21). The average size of start-up deals in 2Q21 was US$32 million compared to US$10 million in 2Q20 and US$19 million in 1Q21. ► Growth deals were the highest with US$6.4 billion invested across 73 deals (US$11.2 billion across 54 deals in 2Q20 and US$4.6 billion across 65 deals in 1Q21). Growth investments in 2Q20 were higher on account of investments worth US$9.6 billion in Jio Platforms, followed by buyouts and start-up investments. PIPE investments recorded US$619 million across 18 deals in 2Q21 (US$360 million across 11 deals in 2Q20 and US$609 million across 12 deals in 1Q21). Credit investments recorded US$355 million in 2Q21 compared to US$464 million in 2Q20 and US$480 million in 1Q21 with 18, 21 and 21 deals respectively. ► From a sector perspective, technology was at the top (US$4.8 billion across 42 deals), highest quarterly value of investments in the sector ever followed by e-commerce sector (US$2.3 billion across 35 deals), and financial services sector (US$1.9 billion across 38 deals). Page 35 19 July 2021 EY analysis of VCCEdge data Key trends: quarterly Exits ► 2Q21 recorded the second best quarter of exits at US$17.8 billion after US$18 billion recorded in 3Q18. On a year-on-year (y-o-y) basis, exits were more than 16 times higher in value in 2Q21 (US$17.3 billion vs. US$1.1 billion in 2Q20) and were higher by 3.8 times compared to 1Q21 (US$4.7 billion). The number of exits in 2Q21(58 exits) were twice that in 2Q20 (28 exits) and at par with number of exits in 1Q21 (60 exits). ► Exits via strategic sale were the highest with US$10.9 billion recorded across 19 deals, accounting for 61% of all exits in 2Q21 followed by 16 exits via secondary sale (sale to other PE funds) worth US$3.6 billion. 2Q21 recorded four PE-backed IPOs that saw PE funds garner US$1.9 billion in sale proceeds. ► From a sector perspective, technology recorded the highest value of exits in 2Q21 (US$11.8 billion across 10 deals) followed by infrastructure (US$1.8 billion across two deals). ► The largest exit in 2Q21 saw Hitachi buyout the stakes held by CPPIB and Partners Group in GlobalLogic for US$8.6 billion. Fundraise ► 2Q21 saw US$1 billion in fundraises compared to US$171 million raised in 2Q20 and US$1.7 billion raised in 1Q21. The largest fundraise in 2Q21 saw Alteria Capital raise US$179 million for its second venture debt fund. Page 36 19 July 2021 EY analysis of VCCEdge data PE/VC quarterly headline trends: investments US$m Total PE/VC investments # 18,489 275 265 265 266 300 18,000 234 244 243 223 217 203 250 15,000 194 188 239 200 12,000 13,450 150 9,000 10,578 16,923 16,025 9,993 6,000 100 11,146 11,110 10,913 9,567 9,699 8,261 9,250 3,000 5,061 1,776 4,585 50 - 349 1,022 - 2Q2018 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 2Q2021 Value (US$m) # of deals Investment in Jio Platforms Investment in Reliance Retail US$m PE/VC investments split across asset classes 2,796 16,000 1,096 1,760 5,258 588 70 4,497 12,000 511 1,695 360 840 895 218 2,871 2,511 3,090 910 8,000 862 1,286 1,450 1,490 2,626 765 12,792 14,068 1,378 11,196 9,707 4,000 8,610 7,941 8,256 1,028 6,593 6,749 7,058 320 7,797 5,246 3,714 - 2Q2018 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 2Q2021 PE/VC investment (other sectors) (US$m) Real estate (US$m) Infrastructure (US$m) Real estate includes deals across real estate (residential and commercial), hospitality and construction Infrastructure includes deals across roads, ports, railways, power and utilities, renewables and telecom infrastructure Page 37 19 July 2021 EY analysis of VCCEdge data PE/VC quarterly headline trends: exits US$m Total PE/VC exits # 7,000 80 6,000 60 58 52 5,000 60 41 42 42 42 44 37 37 4,000 32 36 17,781 28 40 3,000 4,755 18,016 2,000 4,672 3,959 3,313 20 2,658 1,000 2,420 1,895 2,296 1,192 1,060 757 - - 2Q2018 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 2Q2021 Value (US$m) # of exits US$m PE/VC exits split across asset classes 7,000 9 1,760 13 6,000 501 5,000 844 791 4,000 82 284 90 17,994 7 3,000 348 104 15,520 354 201 2,000 3,829 3,674 89 653 3,791 2,958 133 2,353 - 1,000 2,066 92 1,807 302 1,643 967 758 754 - 2Q2018 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 2Q2021 Other sectors (US$m) Real estate (US$m) Infrastructure (US$m) Real estate includes deals across real estate (residential and commercial), hospitality and construction Infrastructure includes deals across roads, ports, railways, power and utilities, renewables and telecom infrastructure Page 38 19 July 2021 EY analysis of VCCEdge data PE/VC quarterly headline trends: fundraise US$m Fundraise # 4,000 25 20 17 20 3,000 15 15 15 14 12 13 14 12 11 15 2,000 3,809 3,869 10 2,607 2,479 2,794 2,749 5 2,768 1,000 2,335 10 1,701 1,430 5 1,713 1,048 171 - - 2Q2018 3Q2018 4Q2018 1Q2019 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 3Q2020 4Q2020 1Q2021 2Q2021 Total funds raised (US$m) Total # of funds raised Page 39 19 July 2021 EY analysis of VCCEdge data Investments (excluding infrastructure and real estate) Total investments (US$m) # of deals 2Q2021 14,068 2Q2021 214 1Q2021 7,797 1Q2021 248 2Q2020 12,792 2Q2020 207 Deal type US$m Deal type # 145 17 Credit investment 419 Credit investment 18 235 14 4,955 10 Buyout 501 Buyout 4 323 5 490 16 PIPE* 342 PIPE* 9 360 11 3,051 111 Start-up/Early stage 2,662 Start-up/Early stage 164 852 124 5,427 60 Expansion/Growth 3,874 Expansion/Growth 53 11,022 53 Deal size US$m Deal size # 10,805 29 >US$100m 4,810 >US$100m 20 10,945 16 1,306 17 US$50m-US$100m 1,095 US$50m-US$100m 14 644 9 1,308 38 US$20m-US$50m 1,046 US$20m-US$50m 32 643 19 284 19 US$10m-US$20m 453 US$10m-US$20m 32 212 14 365 88 * PIPE: Private investment in public equity Note: Deal value not available on 47 out of 207 deals in 2Q2020 , 29 out of 240 deals in 1Q2021 and 23 out of 215 deals in 2Q2021 Page 40 19 July 2021 EY analysis of VCCEdge data Investments: infrastructure Total investments (US$m) # of deals 2Q2021 1,096 2Q2021 13 1Q2021 910 1Q2021 10 2Q2020 588 2Q2020 8 Deal type US$m Deal type # 34 1 Credit investment 51 Credit investment 2 229 4 502 4 Buyout 700 Buyout 2 204 2 129 2 PIPE* 157 PIPE* 2 70 1 Start-up/Early stage 2 Start-up/Early stage 1 4 1 361 5 Expansion/Growth - Expansion/Growth 3 150 1 Deal size US$m Deal size # 701 4 >US$100m 809 >US$100m 3 496 3 338 4 US$50m-US$100m US$50m-US$100m 54 2 US$20m-US$50m 99 US$20m-US$50m 3 77 2 - - US$10m-US$20m - US$10m-US$20m - - - 3 2 * PIPE: Private investment in public equity Note: Deal value not available on 1 out of 8 deals in 2Q2020, 3 out of 10 deals in 1Q2021 and 1 out of 13 deals in 2Q2021 Page 41 19 July 2021 EY analysis of VCCEdge data Investments: real estate Total investments (US$m) # of deals 2Q2021 1,760 2Q2021 16 1Q2021 1,286 1Q2021 17 2Q2020 70 2Q2020 2 Deal type US$m Deal type # 176 3 Credit investment 11 Credit investment 1 851 3 Buyout 416 Buyout 5 65 1 PIPE* 110 PIPE* 1 116 2 Start-up/Early stage 6 Start-up/Early stage 1 5 1 616 8 Expansion/Growth 743 Expansion/Growth 9 Deal size US$m Deal size # 1,181 4 >US$100m 790 >US$100m 4 427 5 US$50m-US$100m 355 US$50m-US$100m 6 65 1 115 4 US$20m-US$50m 116 US$20m-US$50m 4 29 2 US$10m-US$20m 11 US$10m-US$20m 1 7 1 * PIPE: Private investment in public equity Page 42 19 July 2021 EY analysis of VCCEdge data Investments: sector-wise Top sectors by value (US$m) Top sectors by # of deals 4,761 42 Technology 444 Technology 25 340 29 2,311 38 Financial services 52 E-commerce 2,471 36 330 35 1,942 E-commerce 48 Financial services 1,675 35 930 18 1,760 Education 26 Real estate 1,286 13 70 16 Retail and consumer products 16 1,096 5 Infrastructure 910 588 16 Real estate 17 1,046 2 Pharmaceuticals 524 13 873 Infrastructure 10 778 8 Retail and consumer products 93 11 4 Healthcare 18 16 729 Education 672 8 189 Pharmaceuticals 12 8 2,500 46 Others 1,918 Others 51 10,126 65 2Q2021 1Q2021 2Q2020 * In 2Q2020, others includes US$9.6 billion invested in telecom sector, mainly in Jio Platforms Page 43 19 July 2021 EY analysis of VCCEdge data Top PE/VC investments Top PE/VC investments excluding infrastructure and real estate in 2Q2021 Company PE investors Sector Stage US$m Stake (%) Mphasis Limited Blackstone, ADIA, UC Invest, GIC Technology Buyout ~2,800 ~ 75 Bundl Technologies Private Limited Accel, Falcon Edge, Amansa, Carmignac, E-commerce Growth capital 800 16 (Swiggy) QIA, GIC and others Infogain Corporation Apax Partners Technology Buyout ~800 100 Retail and consumer Vini Cosmetics Private Limited KKR, Westbridge Capital Buyout 648 56 products India Quotient, Lightspeed, Tiger Global Media and Mohalla Tech Private Limited (Sharechat) Start-up 502 NA and others entertainment UBS, Blackstone, ADQ, Phoenix Rising, IIFL Think and Learn Private Limited (Byju’s) Education Growth capital 400 2.4 and others Zydus Animal Health and Investments Multiples, CPPIB Pharmaceuticals Buyout 400 100 Limited Aragen Life Sciences Private Limited Goldman Sachs Pharmaceuticals Growth capital 333 33 SoftBank, Shunwei Capital, Venture Meesho Incorporated E-commerce Start-up 300 NA Highway and others TPG, Temasek, B Capital, Kotak PE and API Holdings Private Limited (Pharmeasy) E-commerce Start-up 300 NA others Manipal Healthcare Private Limited NIIF Strategic Opportunities Fund Healthcare Growth capital 286 NA Baron Capital, Lone Pine Capital, Temasek, Pine Labs Private Limited Duro Capital, Sunley House, Marshall Wace Financial services Growth capital 285 1 and others FMR, GIC, Chimera Investments, Baillie Delhivery Private Limited Logistics Growth capital 277 9 Gifford and Company Better World Technology Private Limited SoftBank, Sodexo SVC India Private Limited Financial services Growth capital 250 17 (Zeta) Parksons Packaging Limited Warburg Pincus Industrial Products Buyout 216 80 Page 44 19 July 2021 EY analysis of VCCEdge data Top PE/VC investments Top infrastructure and real estate investments in 2Q2021 Company PE investors Sector Stage US$m Stake (%) Embassy Industrial Parks Private Limited Blackstone Real estate Buyout 715 100 2 Solar Projects of Fortum India Actis Infrastructure Buyout 332 100 Phoenix Mills Ltd., Investment Platform GIC Real estate Growth capital 208 36 Phoenix Tech Zone Private Limited Varde Partners Real estate Credit investment 156 NA IndInfravit Trust CPPIB Infrastructure Growth capital 135 16 The Norwegian Investment Fund for Fourth Partner Energy Private Limited Infrastructure Growth capital 125 NA Developing Countries, The Rise Fund PowerGrid InvIT CPPIB Infrastructure PIPE 108 NA Phoenix IT Infra’s property in Hyderabad Ascendas India Trust Real estate Buyout 69 100 Prius Commercial Projects Kotak Special Situations Fund Real estate Buyout 61 100 Phoenix Group’s, building aVance 6 Ascendas India Trust Real estate Buyout 60 >50 Falcon Edge, Matrix Partners, Sequoia and Dtwelve Spaces Pvt. Ltd. (Stanza Living) Real estate Start-up 102 NA others CDPQ, ADIA, Marshall Wace, Brookfield, Macrotech Developers (Lodha) Real estate Growth capital 100 NA Segantii Capital and others Real estate includes deals across real estate (residential and commercial), hospitality and construction Infrastructure includes deals across roads, ports, railways, power and utilities, renewables and telecom infrastructure Page 45 19 July 2021 EY analysis of VCCEdge data Exits: quarterly analysis Total exits (US$m) # of deals 2Q2021 17,781 2Q2021 58 1Q2021 4,672 1Q2021 60 2Q2020 1,060 2Q2020 28 Exit type US$m Exit type # 1,874 16 Open market 1,069 Open market 22 945 17 3,616 16 Secondary 928 Secondary 15 20 3 10,875 19 Strategic 1,853 Strategic 10 2 6 172 3 Buyback 460 Buyback 4 - 1 1,244 4 IPO 361 IPO 9 93 1 Top sectors US$m Top sectors # 11,782 10 Technology 30 Technology 1 137 2 1,760 8 Infrastructure 791 Financial services 14 - 12 1,323 7 Financial services 1,185 E-commerce 7 337 719 6 Automotive 60 Pharmaceuticals - 4 501 4 Real estate 90 Education - 302 1 404 4 Retail and consumer products 276 Retail and consumer… 6 0 1 1,293 19 Others 2,239 Others 32 283 22 Page 46 19 July 2021 EY analysis of VCCEdge data Top exits Top exits in 2Q2021 Company Sector Sellers Buyer Exit type US$m Stake (%) GlobalLogic Incorporated Technology CPPIB, Partners Group Hitachi Strategic 8,640 90 MphasiS Limited Technology Blackstone NA Secondary 2,000 55 Adani Green Energy SB Energy Holding Infrastructure Softbank Strategic 1,760 80 Limited Sona BLW Precision Forgings Automotive Blackstone NA IPO 719 33 Limited SBI Cards and Payment Services Financial services Carlyle NA Open market 649 5 Limited SBI Life Insurance Company Financial services Carlyle NA Open market 531 4 Limited Embassy Industrial Parks Private Warburg Pincus, Embassy Real estate Blackstone Secondary 500 70 Limited Property Developments Infogain Corporation Technology ChrysCapital Apax Secondary 500 70 Aakash Educational Services Think and Learn Private Education Blackstone Strategic 375 38 Limited Limited (Byju’s) TaskUs Incorporated Technology Blackstone NA IPO 300 12 Coforge Limited Technology Baring Asia Private Equity NA Open market 221 8 Retail and consumer Vini Cosmetics Private Limited Sequoia KKR, Westbridge Capital Secondary 200 17 products Crompton Greaves Consumer Retail and consumer Advent International NA Open market 185 5 Electricals Limited products Krishna Institute of Medical Healthcare General Atlantic NA IPO 177 20 Sciences Limited Aragen Life Sciences Private Pharmaceuticals ChrysCapital Goldman Sachs Secondary 168 17 Limited Page 47 19 July 2021 EY analysis of VCCEdge data Fundraise Top fundraise in 2Q2021 Status Fund US$m Strategy Raised Alteria Capital 179 Venture debt Raised Green Growth Equity Fund, Eversource Fund 137 Green infrastructure Raised JC Flowers India opportunities fund 100 Mid-sized distressed assets Raised Venturi Partners Fund I 100 Consumer space Raised Motilal Oswal Real Estate (MORE) 89 Senior secured debt in post-approval projects Announced Edelweiss Financial Services 1,500 Distressed assets Announced Kotak Investment Advisors 800 ESG compliant infrastructure Fintech, consumer tech, ed tech, health tech and software as a Announced Kotak Pre IPO Opportunities Fund 274 service Page 48 19 July 2021 EY analysis of VCCEdge data How soon after investment should you begin planning the exit? EY helps clients begin with the end in mind to help them improve returns Monthly trend analysis: June 2021 The better the question. The better the answer. The better the world works. Key trends Investments ► PE/VC investments in June 2021 were 22% lower than the value recorded in June 2020 and 33% higher compared to May 2021 (US$5.4 billion in June 2021 vs. US$6.9 billion in June 2020 and US$4 billion in May 2021). June 2020 had large investments worth US$4.9 billion in Jio Platforms. If we exclude these one off investments in Jio Platforms, investments in June 2021 are more than 2.7 times the value recorded in June 2020 (US$2 billion). ► From the point of view of deal type, buyouts, which was the most impacted deal strategy last year were the highest in June 2021 at US$1.9 billion across five deals, followed by growth investments at US$1.6 billion across 25 deals and start-up investments at US$1.4 billion across 53 deals. ► June 2021 recorded 12 large deals (deals of value greater than US$100 million) aggregating US$3.6 billion compared to 11 large deals worth US6.1 billion in June 2020 which includes deals worth US$4.9 billion in Jio Platforms. ► From a sector point of view, technology sector was the top sector in June 2021 with US$1.4 billion in PE/VC investments followed by retail and consumer sector with investments worth US$758 million and infrastructure sector with investments worth US$646 million. Page 50 19 July 2021 EY analysis of VCCEdge data Key trends Exits ► June 2021 recorded 29 exits worth US$3.2 billion, 4.8 times the value of exits in June 2020 (US$657 million) and 74% lower compared to May 2021 (US$12 billion). Exits via IPOs were the highest in June 2021 at US$1.2 billion across four deals. ► The largest exit in June 2021 saw Blackstone sell a partial exit (33%) in Sona BLW Precision Forgings Limited for US$719 million in an offer for sale during the IPO. Fundraise ► June 2021 recorded total fundraises of US$325 million compared to US$121 million raised in June 2020. Page 51 19 July 2021 EY analysis of VCCEdge data PE/VC monthly headline trends: investments Total PE/VC investments US$m # 7,545 106 120 8,000 6,873 105 100 81 77 83 84 82 88 6,000 72 75 70 92 67 80 4,070 4,299 3,864 4,000 60 7,080 7,541 5,858 4,917 5,355 40 2,000 3,303 1,282 4,027 2,210 2,519 20 1,776 1,022 1,616 - 349 0 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Value (US$m) # of deals Investment in Jio Platforms Investment in Reliance Retail US$m PE/VC investments: split across asset classes US$m 8,000 217 7,000 685 429 379 65 936 6,000 2,094 659 5,000 2,398 902 646 15 226 233 333 4,000 298 6,895 3,000 6,428 1,175 997 5 73 4,766 451 4,454 2,000 3,757 62 4,073 3,746 177 4,376 90 2,797 1,000 2,684 1,877 1,349 1,994 - Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 PE/VC investments (other sectors) (US$m) Real estate (US$m) Infrastructure (US$m) Page 52 19 July 2021 EY analysis of VCCEdge data PE/VC monthly headline trends: exits Total PE/VC exits US$m # 12,000 29 29 35 30 22 19 25 8,000 17 17 14 20 12 13 12 11 11 15 9 11,956 4,000 10 974 1034 5 657 134 67 556 288 313 2,218 2,141 2,659 3,166 - 0 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Value (US$m) # of exits US$m PE/VC exits: Split across asset classes US$m 12,000 1,760 501 8,000 9,695 4,000 28 791 3,166 302 524 2,190 62 2,659 134 2 129 1,034 313 1,288 - 355 65 556 159 450 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Other sectors (US$m) Real estate (US$m) Infrastructure (US$m) Page 53 19 July 2021 EY analysis of VCCEdge data PE/VC monthly headline trends: fundraise Fundraise US$m # 3,500 9 10 8 8 2,800 8 6 6 2,100 6 4 4 4 4 1,400 3 3 4 2,195 2 2374 700 1476 1 2 121 480 93 20 854 380 479 569 154 - 325 0 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Nov-20 Dec-20 Jan-21 Feb-21 Mar-21 Apr-21 May-21 Jun-21 Total funds raised (US$m) Total # of funds raised Page 54 19 July 2021 EY analysis of VCCEdge data PE/VC investments: US$4,376 million over 97 deals (excluding infrastructure and real estate investments) Top sectors by value US$m Top sectors by volume 1,409 17 Technology 238 Financial services 9 175 11 758 16 Retail and consumer products 2 Technology 16 3 6 516 14 Education 36 E-commerce 8 128 10 510 11 Financial services 818 Retail and consumer products 1 281 3 479 8 E-commerce 305 Education 6 87 6 199 6 Food and agriculture 17 Media and entertainment 1 40 2 186 5 Pharmaceuticals 733 Healthcare 1 656 6 321 24 Others 647 Others 22 5,059 31 Deal size Deal Type Value (US$m) Volume Value (US$m) Volume 2,949 9 98 12 2,092 >US$100m 8 - Credit investment 1 5,814 9 208 6 522 7 1,448 3 195 US$50m - US$100m 2 421 Buyout 4 184 2 40 2 579 16 368 9 323 US$20m - US$50m 10 27 PIPE* 3 242 7 108 2 132 8 1,319 51 106 US$10m - US$20m 8 319 Start-up/Early stage 32 68 4 277 41 195 46 1,143 22 81 Jun’21 May’21 Jun’20 Page 55 19 July 2021 EY analysis of VCCEdge data PE/VC investments: US$979 million over nine deals (infrastructure and real estate investments) Top sectors by value US$m Top sectors by volume 646 5 Infrastructure 233 Infrastructure 3 379 6 333 4 Real estate 997 Real estate 6 65 1 Deal size Deal Type Value (US$m) Volume Value (US$m) Volume 665 3 13 1 850 >US$100m 2 - Credit investment - 292 2 229 4 264 3 428 2 328 US$50m - US$100m 4 812 Buyout 3 65 1 65 2 21 1 21 1 51 US$20m - US$50m 2 - PIPE* - 77 2 - 29 2 86 2 - US$10m - US$20m 100 Start-up/Early stage 1 - 431 3 - Jun’21 May’21 Jun’20 Page 56 19 July 2021 EY analysis of VCCEdge data Top PE/VC investments Top PE/VC investments excluding infrastructure and real estate in June 2021 Company PE investors Sector Stage US$m Stake (%) Infogain Corporation Apax Partners Technology Buyout ~800 100 Vini Cosmetics Private Retail and consumer KKR, Westbridge Capital Buyout 648 56 Limited products Think and Learn Private UBS, Blackstone, ADQ, Phoenix Rising, IIFL Education Growth capital 400 2.4 Limited (Byju’s) and others API Holdings Private Limited TPG, Temasek, B Capital, Kotak PE and others E-commerce Start-up 300 NA (Pharmeasy) Browserstack Software Accel, Bond Capital, Insight Venture Technology Start-up 200 5 Private Limited (Percy) Delightful Gourmet Private Multiples, Temasek, 3one4 Capital, Food and agriculture Start-up 192 27 Limited (Licious) Bertelsmann and others Star Health and Allied GIC, Capital Group Financial services Growth capital 165 NA Insurance Co. Limited Federal Bank Limited IFC Financial services PIPE 125 5 Encube Ethicals Private Gulf Islamic Investments, Quadria Capital Pharmaceuticals Growth capital 120 Minority Limited Quicko TechnoSoft Labs Cisco Investments, Eight Roads, Sequoia, Technology Growth capital 90 15 Private Limited (Whatfix) SoftBank and others Page 57 19 July 2021 EY analysis of VCCEdge data Top infrastructure and real estate investments Top infrastructure and real estate investments in June 2021 Company PE investors Sector Stage US$m Stake (%) 2 solar projects of Fortum Actis Infrastructure Buyout 332 100 India Phoenix Mills Ltd., GIC Real estate Growth capital 208 36 investment platform Fourth Partner Energy The Norwegian Investment Fund for Infrastructure Growth capital 125 NA Private Limited Developing Countries, The Rise Fund 250MW Solar Project of IFU, United Nations Office for Project Services' Infrastructure Growth capital 98 49 ACME Solar S3i Land parcel from Godrej Fund Management Real estate Buyout 96 100 Puravankara 450MW Renewable asset JV Brookfield Infrastructure Start-up 70 NA with ACME Page 58 19 July 2021 EY analysis of VCCEdge data Exits: US$2,666 million across 29 deals in June 2021 Exits in June 2021 Top sectors Deal Type Value (US$m) Volume Value (US$m) Volume 906 1 - 8,861 Technology 137 Buyback- 1 719 4 - Automotive- 3 - 4 1,015 8 698 6 842 Open market 5 616 Financial services 2 132 2 559 5 402 3 Retail- and consumer products 853 9 - 693 Secondary 4 226 2 Healthcare- 4 1 - 1 55 8 105 3 196 Pharmaceuticals 2 10,421 Strategic 84 7 1 2 4 83 Food- and agriculture 2 - 1,244 4 83 IPO- 501 Real estate 302 2 93 1 1 Page 59 19 July 2021 EY analysis of VCCEdge data Top exits Top exits in June 2021 Company Sector Sellers Buyer Exit type US$m Stake (%) Sona BLW Precision Forgings Automotive Blackstone NA IPO 719 33 Limited SBI Cards and Payment Financial Services Carlyle NA Open market 649 5 Services Limited Infogain Corporation Technology ChrysCapital Apax Secondary 500 63 TaskUs Incorporated Technology Blackstone NA IPO 300 12 Vini Cosmetics Private Retail and consumer Sequoia KKR, Westbridge Capital Secondary 200 17 Limited products Crompton Greaves Retail and consumer Advent NA Open market 185 5 Consumer Electricals Limited products Krishna Institute of Medical Healthcare General Atlantic NA IPO 177 20 Sciences Limited Zensar Technologies Limited Technology Apax NA Open market 104 11 Encube Ethicals Private Gulf Islamic Investments, Pharmaceuticals Multiples Secondary 80 10 Limited Quadria Capital Vikram Hospital Bengaluru Manipal Health Enterprises Healthcare Multiples Strategic 49 100 Private Limited Private Limited Page 60 19 July 2021 EY analysis of VCCEdge data Fundraise Top fundraise/announcements in June 2021 Status Fund US$m Strategy Raised Venturi Partners Fund I 100 Consumer space Raised India Quotient Fund IV 64 Seed-to-early-stage venture capital Double down its best on performing companies in the Raised India Quotient Opportunities Fund 40 portfolio Announced Edelweiss Financial Services 1,500 Distressed assets Fintech, consumer tech, ed tech, health tech and Announced Kotak Pre IPO Opportunities Fund 274 software as a service Announced Harsha Moily's Venture Capital Fund 200 Climate tech companies Page 61 19 July 2021 EY analysis of VCCEdge data About EY Private Equity Services About EY’s Private Equity Services Practice EY has been working with the private equity industry for more than 25 years, with approximately 25,000 seasoned professionals worldwide dedicated to the industry and its business issues. EY serves 74% of the top 300 PE firms included in the Global PEI 300 firms list. Private equity firms, portfolio companies and investment funds face complex challenges. They are under pressure to deploy capital amid geopolitical uncertainty, increased competition, higher valuations and rising stakeholder expectations. Successful deals depend on the ability to move faster, drive rapid and strategic growth and create greater value throughout the transaction life cycle. EY taps its global network to help source deal opportunities and combines deep sector insights with the proven, innovative strategies that have guided the world’s fastest growing companies. In India, EY is among the leading providers of advisory, tax, transactions and assurance services. The organization is also the number one professional services brand* in India, which is a testimony to our relentless commitment to deliver exceptional client service and create a better working world. 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