PE investments in India decline over 75% in Q1 of CY23, lowest since 2018

It is the sixth straight quarter of decline as global macroeconomic and geopolitical headwinds drive caution in investment activity, says analyst

India’s private equity (PE) investment stood at $2,172 million in the first quarter of calendar year 2023, down 75.4 per cent from $8,830 million in Q1 of CY 2022. The investments declined 31.9 per cent sequentially. The total number of deals fell by 19.9 per cent sequentially in Q1 2023, and 30.9 per cent YoY, according to the India Private Equity Q1 2023 Snapshot, by Refinitiv.

Elaine Tan, senior analyst at Refinitiv, said, “Private equity investments in India declined for the sixth straight quarter during Q1 of 2023, as global macroeconomic and geopolitical headwinds drove caution in investment activity. Private equity investments in India dropped 75 per cent compared to the first quarter of 2022. This is the lowest start to a year by value for PE investments in India since 2018 ($1.7 billion).”

PE investment trends

Private internet firms outdid computer software enterprises in attracting capital. PE investors parked $870.9 million in internet firms in Q1 2023, compared with just $392.3 million in computer software companies.

The computer software industry’s investment fell by 85.2 per cent in Q1 2023 in one of the steepest declines. However investments in some other industries skyrocketed with utilities posting a staggering 22,513 per cent YoY growth in mop-up to $104 million. Investments in industrial/energy enterprises soared by 361 per cent YoY to $148 million, while those in medical/health firms soared by 310.5 per cent to $174.2 million. PE investment in computer hardware, on the other hand, fell by 94.9 per cent to $11.7 million.

Girnar Insurance Brokers Pvt Ltd garnered $146.56 million, the highest amount across industries. Sona Blw Precision Forgings Ltd took the second spot with $146.55 million. The Internet industry became the most favoured in terms of PE investment, garnering$401.83 million.

PE fund-raising activity

The capital raised through funds declined by 41.3 per cent YoY and 45.1 per cent sequentially to $2,587.89 million. The number of funds also declined by 40 per cent YoY to 12.

“With turbulent market conditions and uncertainty, private equity fundraising activity in India also fell 41 per cent this year compared to the first quarter of 2022 and by 45 per cent from the fourth quarter of last year,” Elaine Tan added.