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Our 2021 India Investment trends and outlook was premised on a) global central banks keeping rates low and easy liquidity; b) global fiscal stimulus will continue and prop up growth; and c) low cost of capital and better growth prospects will lead investors to search for yield and growth driving capital into growth assets and emerging markets.

Well, Capital did flow chasing growth and returns.

In 2021, Global inflows into public equities of ~USD 1 trillion exceeded the combined net flows (as per BofA research) of the previous 19 years. Global Private Assets continued its bull run. 2021 turned out to be another year of USD 1 trillion of global fund raise for Private Equity, Private Credit, Real Estate and Infrastructure. Global Venture investing came on its own in 2021. More than ~USD 600 billion of venture capital (VC) investment activity (2x of 2020) was reported and more importantly it was across geographies and attracted new investors. The size of the VC investments is staggering considering these market opportunities are not as deep as traditional public and private markets. That also explains the froth in valuation of start-ups.

Well, India was also a key beneficiary of these flows. In fact, the VC investment boom in India was the biggest stand-out. As per VC Circle, data since 2011 shows that India now has 83 Unicorns (start up ventures with a valuation of USD 1 billion); 44 of those achieved that status in 2021. Total PE/VC investments in India in 2021 is estimated at ~75 billion of which VC was ~USD 35 billion. These are large flows which have essentially gone into building new Indian businesses, brands and markets. This bodes well for India’s economic recovery.

Table 1: The Risk-on Bull-run continued in 2021

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