Private equity and venture capital investments in India have seen a significant 60% year-on-year growth in the July-September quarter, reaching a total of USD 13.6 billion, according to the latest EY-IVCA monthly PE/VC roundup. The report reveals that this quarter recorded investments worth USD 13.6 billion across 209 deals, a substantial increase compared to the third quarter of 2022.
However, when compared to the previous quarter (April-June), the deal value in the July-September quarter was 5% lower. Additionally, the number of deals during this period decreased by 18% year-on-year.
Vivek Soni, Partner and National Leader of Private Equity Services at EY India, explained that the growth in total PE/VC investments in 3Q2023 was driven by an 88% increase in pure-pay PE/VC investments. Notably, 31 large deals amounting to USD 10.7 billion were recorded during this quarter, compared to 15 large deals worth USD 4.8 billion in 3Q2022.
According to the report, the life sciences sector has attracted a significant sum of USD 22.1 billion in PE/VC investments since 2018, with investments almost equally divided between pharmaceutical and healthcare. While the early years saw growth driven by pharmaceutical investments, healthcare investments have taken the lead since the pandemic.
In terms of investment types, growth investments reached USD 4.5 billion in 3Q2023, followed by buyouts at USD 3.5 billion. The infrastructure sector, particularly renewable energy investments, led the way with USD 3.9 billion in this quarter.
Despite positive indicators in the Indian economy, such as new highs in the Index of Industrial production, GST collections, advance tax collections, and increased consumer confidence during the festive season, a deteriorating global macro remains a concern. The recessionary fears in the US and Europe, combined with any sustained spike in crude oil prices, may have a detrimental impact not only on inflation worldwide but specifically on the Indian economy.
The startup sector continues to face challenges, with investments in startups reaching a seven-year low. However, this does not indicate inactivity from PE/VC funds, as secondary deals have reached an all-time high of USD 5.2 billion. Additionally, PIPE investments in 2023 have also reached an all-time high of USD 7.5 billion. The buoyant equity markets have facilitated a revival in the PE-backed IPO market, contributing to the overall improving investment sentiment.
Despite the uncertain global macro, Soni expressed optimism about the Indian PE/VC investments in 2023, expecting them to surpass levels achieved in 2022 due to a strong deal pipeline.
In terms of exits, 3Q2023 recorded exits worth USD 8.6 billion across 85 deals. Exits were seen across all deal segments, with IPOs showing the highest growth year-on-year, followed by secondary and strategic exits.
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