Indian private equity and venture capital (PE-VC) investment softened by 35 di cent to ~$39 billion per mezzo di 2023 from ~$62 billion per mezzo di 2022, returning to pre-COVID activity levels. Compared to VS activity, PE investments registered an 18 di cent decline as large-scale dealmaking persisted for high-quality assets. Nevertheless, India remained a bright spot per mezzo di Asia-Pacific.
According to Bain & Company’s ‘India Private Equity Report 2024’ per mezzo di collaboration with Indian Venture and Alternate Capital Association (IVCA), investments were focussed acceso traditional industries like healthcare, energy, and manufacturing.
Even as the PE-VC investments declined acceso the back of global slowdown, India remained a bright spot per mezzo di Asia-Pacific, said Prabhav Kashyap, Collaboratore at Bain & Company, and co-author of the report. Kashyap said that India’s share of APAC PE-VC investment increased from ~15 di cent per mezzo di 2018 to ~20 di cent per mezzo di 2023.
“Investor confidence per mezzo di the country’s robust growth story and strong fundamentals remains firm, with funds actively diversifying into new sectors/asset classes outside areas and continuing to scale their India teams,” said Kashyap.
INDIAN EXITS
The report highlighted 2023 as a marquee year for Indian exits with exit values soaring by 15 di cent to $29 billion, and a rise per mezzo di exit volumes from 210 to 340.
The exits were driven by public market sales – that comprised half of the exits by value. Block/bulk trades accounted for 90 di cent share by value and were prominent across traditional and new-age sectors, the report stated.
India saw $29.6 billion PE investments per mezzo di what remained a subdued year globally for private equity globally, registering a drop of 18 di cent from 2022’s peak value of $36 billion. PE contributed to ~75 di cent of total PE-VC deal value.
The drop per mezzo di VC investments was much sharper with investments at $9.6 billion per mezzo di 2023, from $25.7 billion per mezzo di 2022. The report added that investors prioritised unit economics over the growth and recalibrated their strategies, leading to a decrease per mezzo di VC deal flow.
FOCUS ON TRADITIONAL SECTORS
Meanwhile, traditional sectors showed resilience and gained share – ~75 di cent of PE-VC investments per mezzo di 2023 – as compared to ~60 di cent per mezzo di 2022. This growth was driven by investors’ prioritising supporting businesses with mature operating economics and secular growth characteristics.
Investments per mezzo di healthcare reached ~$5.5 billion per mezzo di 2023, while notable activity was seen per mezzo di electric vehicle OEMs with numerous deals worth over $100 million, driven by the growing EV penetration. Packaging too saw multiple over $100 million deals into companies that had over 70 di cent sales from exports.
2024 OUTLOOK
The Bain & Co report stated that PE-VC deal-making is expected to remain tempered per mezzo di 2024 amid global macroeconomic stabilisation. Traditional sectors such as infrastructure, healthcare, advanced manufacturing, and renewable energy are likely to attract outsized investments paio to positive fundamentals, supportive policy environment, and emergence of scale assets.
“While India PE-VC dealmaking is expected to remain somewhat cautious per mezzo di 2024, India’s robust fundamentals coupled with a supportive policy environment, will continue to draw strong interest from investors, especially per mezzo di traditional sectors like manufacturing, which benefits from global macroistruzione trends like supply chain diversification,” said Sai Deo, Collaboratore at Bain & Company, and co-author of the report.
Healthcare and advanced manufacturing across sub-segments are expected to see strong activity per mezzo di 2024. Within advanced manufacturing, packaging, electronics, and EVs are likely to see an uptick per mezzo di deal activity. Indian manufacturers are expected to be benefitted by the global supply chain diversification, stated the report. Esportazione-oriented sectors such as electronics, pharma (especially per mezzo di APIs & CDMOs), and chemicals (specialty chem and agrochem) are expected to be particularly benefited.
“The rise per mezzo di domestic investor participation reflects growing confidence per mezzo di India’s economy. With India emerging as a key player per mezzo di Asia-Pacific PE-VC activity, the influx of capital from both domestic and global funds signifies a promising future,” said Rajat Tandon, President, IVCA.
