"The decline in the number of deals could signify an increased efficiency in decision-making, allowing stakeholders to concentrate on opportunities that promise long-term value and sustainability"
Private equity and venture capital (PE/VC) funds' investments into Indian entities declined by nearly a fourth to USD 27.5 billion in January-June 2023 against the year-ago period, a report said on Thursday. However, in value terms, investments were up 33 per cent against July-December 2022, the report by industry lobby Indian Venture and Alternate Capital Association (IVCA) and consultancy firm EY said. The first half (H1) of 2022 saw USD 35.9 billion in investments, while the second half saw values declining to USD 20.6 billion. The number of deals declined 44 per cent compared to the year-ago period and 16 per cent sequentially to 427, the report said. EY partner Vivek Soni said there has been a dip in investments into startups but the overall trend for PE/VC investments remains positive. The PE/VC funds raised over USD 10.2 billion in H1, which augurs well for the investment activity going forward, the report said. The monthly report said at USD 3.1 billion, June witnessed a
Move to help curb cherry-picking of deals by LPs, manage conflict of interest
Investments by private equity and venture capital funds declined by nearly a third to USD 54.2 billion in 2022, which was characterised by a 'funding winter' after consecutive years of surge. Even after the decline, the year was the second best for India in terms of bets taken by such long term investors on growing Indian companies, a report by industry lobby Ivca and the consultancy firm EY said. The investments by value were down 29 per cent as compared to USD 75.9 billion in 2021, while by volumes there was a 4.6 per cent decline at 1,211 transactions as against 1,269, the report said, adding that a sharp fall in large deals resulted in the decline. The firm's partner Vivek Soni said investor interest has been weighed down by inflation woes, recession fears, the rising cost of capital and elevated levels of uncertainty driven by geostrategic challenges. He added that 99 funds dedicated to India raised USD 17.4 billion in 2022, and there is a high level of dry powder available ..
But does this mean that 2023 could be different, given the unutilised capital?
Inflation woes, recession fears, the rising cost of capital, and elevated levels of uncertainty driven by geopolitical tensions have weighed down the PE/VC activity in 2022
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Domestic fund houses were subdued during the pandemic years. In the first half of 2021, they invested $3.3 billion, just about half of the amount this year, for a share of 13.8 per cent
The major PE-backed IPO so far this calendar has been that of logistics major Delhivery. It saw Carlyle, China Momentum Fund, Softbank sell stakes worth $131 mn
Real estate and infrastructure sector investments took the top spot in May 2022, recording $1.7 billion in investments
Fundraises, however, continued to show a healthy trend, with April 2022 recording a total fundraise of $1.5 billion across 16 funds compared to $569 million raised in April 2021 by 8 funds.
The tax authorities gave assessment orders to at least 12 such houses last week, and initiated penalty proceedings against them
'E-commerce, consumer platforms, and IT services sectors were favorites among investors, recording 56% of total deal value in 2021,' says 'India Investments Pulse' report by Praxis Global Alliance
Thirteen large deals of over USD 100 million each and heightened focus on startups helped the Indian venture investing ecosystem post a 180 per cent increase in the overall activity in January
Stock market rallied strongly after the lows due to the coronavirus pandemic in 2020.
With a month to go, PE/VC investments in 2021 at $72.6 billion have surpassed the all-time high seen in 2020 by 53 per cent, driven by mega investments in start-ups and large buyouts.
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The month saw 127 deals, 28 per cent higher than last year (92 deals) but 5 per cent lower than the previous month (134 deals)
Private equity (PE) and venture capital (VC) investments touched an all-time high of USD 12.9 billion in October, on the back of high-value deals, a report said on Tuesday