Private equity (PE) and venture capital (VC) investments in India experienced a significant surge, marking a 60% year-on-year growth in the July-September quarter, reaching USD 13.6 billion, according to the latest EY-IVCA monthly PE/VC roundup.
Investment Trends
The third quarter of 2023 witnessed substantial investment activity, with USD 13.6 billion deployed across 209 deals, representing a notable increase compared to the same quarter in 2022.
While the deal value saw a 5% decrease sequentially from the April-June quarter, the number of deals in the July-September quarter decreased by 18% compared to the previous year.
Sector Insights
Pure-play PE/VC investments experienced an 88% increase, contributing significantly to the overall investment growth. Notably, the quarter saw 31 large deals amounting to USD 10.7 billion, compared to 15 large deals worth USD 4.8 billion in the third quarter of 2022.
Over the years, the life sciences sector has been a significant recipient of PE/VC investments, attracting USD 22.1 billion since 2018. This investment has been evenly distributed between pharmaceuticals and healthcare, with healthcare witnessing increased traction post-pandemic.
Sector-wise Distribution
In the third quarter of 2023, growth investments led the way, totaling USD 4.5 billion, followed by buyouts at USD 3.5 billion. The infrastructure sector emerged as the top sector, recording USD 3.9 billion in investments, driven by significant activity in the renewable energy segment.
Market Dynamics
Despite positive signals in India’s macroeconomic indicators, including new highs in the Index of Industrial Production, GST collections, and consumer confidence, the global macroeconomic environment poses challenges. Recessionary fears in the US and Europe, coupled with potential spikes in crude oil prices, present downside risks that need careful evaluation.
Startup Sector Challenges and Opportunities
The startup sector faces challenges, with year-to-date investments at a seven-year low. However, secondary deals and PIPE (Private Investment in Public Equity) investments have surged to all-time highs of USD 5.2 billion and USD 7.5 billion, respectively.
Outlook and Exits
Despite global uncertainties, a robust deal pipeline indicates optimism for surpassing 2022 investment levels. Exits in the third quarter of 2023 amounted to USD 8.6 billion across 85 deals, demonstrating growth across all exit segments, with IPOs leading the way in year-on-year growth, followed by secondary and strategic exits.
