PE/VC roundup 1Q2024

A snapshot of PE/VC activity during 1Q2024

According to the IVCA-EY monthly PE/VC roundup, PE/VC investments in 1Q2024 were 1% lower than in 1Q2023 and 41% higher than in 4Q2023.

Investments

• PE/VC investments in 1Q2024 were 1% lower than in1Q2023 and 41% higher than in 4Q2023 (US$13.5 billion in 1Q2024 vs. US$13.6 billion in 1Q2023 and US$9.6 billion in 4Q2023). In terms of the number of deals, 1Q2024 recorded 33% growth compared to 1Q2023 (292 deals in 1Q2024 vs. 220 deals in 1Q2023).
• 1Q2024 recorded 29 large deals (deals value at over US$100 million) aggregating to US$10.1 billion compared to 32 large deals aggregating to US$10.9 billion in 1Q2023 and 53% higher compared to 4Q2023 (US$6.6 billion across 25 deals).
• Pure play PE/VC investments (excluding investments in real estate and infrastructure) amounted toUS$6 billion, 5% higher than the value recorded in 1Q2023 (US$5.8 billion), and a 15% decline compared to 4Q2023 (US$7.1 billion). Pure play PE/VC investments accounted for 45% of all PE/VC investments in 1Q2024. The largest deal in 1Q2024 in pure play PE/VC investments includes GQG Partners, ADIA, Goldman Sachs and others investing US$711 million into Bharti Airtel Limited.
• Buyouts were the highest deal segment in 1Q2024 (US$4.5 billion across 10 deals) and recorded a growth of 39% compared to 1Q2023 (US$3.2 billion across 16 deals). Growth investments were the second highest in 1Q2024 (US$3.6 billion across 40 deals), a decline by 16% compared to 1Q2023 (US$4.2 billion across 26 deals). Private investment in public equity (PIPE) followed at US$2.7 billion across 51 deals, an 8% decline y-o-y (US$2.9 billion across 19 deals in 1Q2023). Start-up investments recorded US$1.7 billon across 152 deals, a decline of 26% (US$2.3 billon across 137 deals in 1Q2023). Credit investments had the lowest share in 1Q2024 (US$1.1 billion across 39 deals) which were 17% higher than 1Q2023 (US$957 million across 22 deals).
• The infrastructure sector received the maximum PE/VC investments in 1Q2024 (US$6.5billion across 23 deals) marking a 138% year-on-year growth (US$2.7 billion across 14 deals). Brookfield’s investment of US$2 billion in ATC India Tower Corporation Private Limited was the largest deal in the infrastructure space in 1Q2024. The financial services sector was the second largest in 1Q2024 (US$1.5 billion across 48 deals), experiencing a 4% decline compared to 1Q2023 (US$1.5 billion across 43 deals). Real estate secured the third rank, recording US$956 million across 19 deals, a decline of 81% y-o-y (US$5.1 billion across 17 deals in 1Q2023). These sectors collectively contributed 66% of the total PE/VC investments in 1Q2024.

Spotlight: PE/VC investment trend in the financial services sector

• Financial services sector has been the largest sector in terms of pure play PE/VC investments over the past decade. The sector has received total of US$64.6 billion in PE/VC investments (2014 to March 2024), 67% of which has come in the past five years.
• PE/VC investments in 2021 were the highest ever for the sector at US$11.7 billion with a 152% increase y-o-y. It is also the largest sector in terms of the number of deals with over 1,000 deals in the past five years.
• FinTech has been the most preferred sub-sector for PE/VC investments over the last five years. It received an investment of US$16.6 billion (38% of the total PE/VC investments since 2019). NBFC (US$9.7 billion) and insurance (US$4.4 billion) secured the second and third rank, contributing 22% and 10% of the FS PE/VC investments (since 2019) respectively.
• While the initial years witnessed significant investments in PIPE (Private investment in public equity) and growth, the trend in financial services sector investments has shifted towards funding start-up ventures with new-age, technology-enabled business models that are disrupting the traditional methods of delivering financial services. Start-up investments have accounted for 40% of total PE/VC investments in financial services since 2019. This trend is expected to strengthen further as more PE/VC funds support financial services companies leveraging technology to address real-world challenges related to payments, distribution, customer acquisition, and more.
• The financial services sector has experienced a transformative wave of innovation showcasing the dynamic evolution across various fronts such as MSME credit, affordable housing finance, facilitated by the availability of higher quality data, GST records, and other factors.
• The ongoing digital transformation of the financial services industry is expected to persist with a growing adoption of technology-driven solutions, including digital banking services, blockchain and artificial intelligence. These advancements are anticipated to drive innovation and enhance efficiency. FinTech start-ups are diversifying into new areas such as insurance and wealth management. As the FinTech ecosystem evolves, the sector would continue to attract interest and investments from PE/VC firms.

Exits

• 1Q2024 recorded exits worth US$5.1 billion, marking a 35% increase from 1Q2023 (US$3.8 billion) and a 23% decrease from 4Q2023 (US$6.6 billion). In terms of number of exits, there was a 23% growth, with 1Q2024 recording 80 exits compared to 65 exits in 1Q2023, and a 3% increase compared to 78 exits in 4Q2023.
• In 1Q2024, open market exits were the highest, with US$4.3 billion recorded across 46 deals with a 105% growth y-o-y (US$2.1 billion across 19 deals in 1Q2023). Strategic exits ranked second, with US$460 million recorded across 13 deals, a decline of 4% compared to 1Q2023 (US$481million across 26 deals). PE-backed IPO exits worth US$271 million (across 11 exits) were 539% higher than 1Q2023 (US$42million across two PE-backed IPO exits), followed by secondary exits recording US$59 million across 10 deals, a significant drop of 95% compared to 1Q2023 (US$1.1 billion across 17 deals).
• The largest exits in 1Q2024 saw Brookfield’s exit from Data Infrastructure Trust for US$801 million.
• From a sector perspective, the financial services sector recorded the highest value of exits at US$1.4 billion across 17 deals in 1Q2024, followed by the infrastructure sector with exits worth US$803 million across six deals. Food and agriculture secured the third rank with exits worth US$517 million across eight deals.

Fundraise

• Fundraises in 1Q2024 declined by 27%, with US$2.8 billion raised across 21 funds compared to US$3.9 billion raised across 27 funds in 1Q2023. Additionally, a 4% decline was observed compared to US$2.9 billion raised across19 funds in 4Q2023.
• The largest fundraising event in 1Q2024 was a US$1 billion agreement signed by Goldman Sachs and Mubadala to invest in private credit opportunities throughout the Asia-Pacific region, with a particular focus on India.