PE inflows plunge 42% to $23.3 bn in 2022, lowest since 2019: Report

PE investments into domestic companies fell sharply YoY by 42 per cent to USD 23.3 billion in 2022, which is the lowest since 2019, when it was USD 15.8 billion, according to an industry report

Private equity investments into domestic companies fell sharply year-on-year by 42 per cent to USD 23.3 billion in 2022, which is the lowest since 2019, when it was USD 15.8 billion, according to an industry report.

The numbers reflect the overall funding winter that the startup space in particular, and the overall foreign investments in general have been witnessing since the Ukraine war began last February.

Private equity investment inflows into the country fell by a sharp 42 per cent in 2022 from last year to USD 23.3 billion -- the lowest annual inflows since 2019 when it was a low USD 15.8 billion, but still relatively elevated compared to historical levels, said Elaine Tan, a senior analyst at Refinitiv, the LSEG business arm that provides financial markets data and insights.

 

The report did not say how many deals were closed in the year.

In the December quarter, the PE investments totalled USD 3.61 billion, down 8.1 per cent sequentially from USD 3.93 billion and fell 67.2 per cent annually when it was USD 11.06 billion, according to the report.

The total number of deals in Q4 fell 24.8 per cent to 333 from 443 in Q3 and by 19 per cent from Q4 of 2021 when the transactions stood at 411, according to the report.

Tan attributed the sharp decline to the ongoing geopolitical tension, rising interest rates and recession fears in the Western economies, which all made global investors cautious in making investments.

Internet-specific, computer software and transportation have attracted the majority of the funding, accounting for 66 per cent of the total during the year at USD 8.58 billion.

The Internet-specific sector has seen a 57.4 per cent decline in fund inflows, while the number of deals declined to 528 in 2022 from 556 in 2021.

Computer software companies saw funding tap declining to the tune of 46.4 per cent, financial services (down 34.6 per cent), as well as medical and health saw the same falling by 26.4 per cent from 2021 levels.

However, industries catering to transportation saw inflows nearly doubling with a 93 per cent jump, communications soared by 225.6 per cent, and agri/forestry/fish jumped by 215.8 per cent in terms of fund inflows.

Tan expects this trend to continue as investors diversify away from China amid increased uncertainty, and India and Southeast Asia may benefit from this shift.

Of the total, domestic PE funds raised USD 13.7 billion in 2022, up 163.2 per cent over 2021 when it was only USD 5.21 billion. This pushes the substantial capital waiting to be deployed as India-based PE fundraising activity totalled USD 32 billion -- from 2019 to 2022.

The deal street was topped by Think & Learn and VerSe Innovation which received USD 800 million each from PEs in the year, followed by Bharti Airtel and Bundl Technologies which got USD 700 million each, Tata Motors Electric Mobility (USD 494.7 million), Reliance Retail (USD 343.5 million), NTEX Transportation Services (USD 330 million), Delhivery (USD 304 million) and Busybees Logistics Solutions and Renkube received USD 300 million each.