Private equity deals in India pick up after two years of decline

Up 9% at $24 bn in first nine months of 2024; financial services, consumer sectors lead

After two years of decline, private equity (PE) transactions in India have risen by 8.9 per cent in the first nine months of 2024, reaching $24.2 billion, compared to $22.23 billion in the same period in 2023.

The financial services sector led the surge, with deals totalling $6.3 billion, accounting for 26 per cent of all transactions as on Friday. The technology sector followed with $5 billion, while non-cyclical and cyclical consumer sectors recorded $4.3 billion and $3.5 billion, respectively.
 

Last week, EQT announced plans to acquire a 100 percent stake in an affordable housing finance firm Indostar Home Finance for Rs 1,750 crore. Other significant deals include Warburg Pincus’ purchase of Shriram Housing Finance in May for Rs 4,630 crore and CVC Advisors’ acquisition of Aavas Financiers in August that led to exits for Kedaara Capital and Partners Group. This resurgence is seen as promising for private equity, which aims to invest heavily in India while also successfully exiting previous investments. With stock markets at record highs, many PE firms have cashed out by selling shares through block deals and initial public offerings (IPOs).

 

According to Bloomberg data, PE firms recorded 859 transactions (including exits) between January and September 2024, up from 701 during the same period last year. In the first nine months of 2023, PE transactions had fallen by 46.6 per cent compared to the same period in 2022. The 46.6 per cent Y-o-Y decline in 2023 followed a particularly strong 2021, when deals totalled $55.3 billion, primarily focused on the retail and telecom subsidiaries of Reliance Industries.  
 

The largest deal so far in 2024 is Sequoia Capital’s $1.5 billion investment in Walton Street India in May. Advent International’s $1 billion exit from Cohance Lifesciences ranks second, Bloomberg data showed.
 

As the Indian economy continues to grow, PE officials believe the industry is poised for numerous billion-dollar deals. “There are several multi-billion dollar deals currently under negotiations and they are likely to be announced before the year-end,” 

said the head of a PE firm, asking not to be quoted. 
 

“Some large PE firms are seeking majority control of the target company as it gives them the flexibility to transform the company by bringing in their global management expertise and then sell it at a 6-7 times valuation a few years later,” he said. Turn to Page 6 >

PE officials also noted that excess capital is currently pursuing Indian assets, creating an ideal opportunity for the government to divest stakes in various listed public-sector units in favour of investors like themselves. “The government could secure good valuations for its shares as the markets are at an all-time high,” the official said.
 

Leading firms like Blackstone, which has invested $50 billion in India over the past two decades, plan to further expand their footprint. In April, Blackstone committed an additional $25 billion for sectors such as infrastructure, data centers, and logistics. Of this, $17 billion will be allocated for new investments and $7.5 billion for enhancing existing portfolios. Bain Capital is also aiming to invest $10 billion for investments over the next three years, while KKR & Co plans to ramp up its investment pace in India, according to senior officials.
 

“The successful exits are encouraging PE firms to invest more in India, especially as growth slows in other countries like China,” said the chief executive officer of a leading PE firm.