- Buyout investments in February 2024 accounted for the highest portion of PE/VC investments, amounting to $735 million, marking a 62% year-on-year decrease
- February 2024 recorded PE/VC investments of US$2.2 billion
- Infrastructure emerged as the top-performing sector, drawing investments totaling $412 million through seven separate deals
Mumbai, 21 March 2024: According to the IVCA-EY monthly PE/VC roundup, PE/VC investments in February 2024 (US$2.2 billion) were 39% lower than February 2023 and 67% lower than January 2024.
Vivek Soni, Partner and National Leader, Private Equity Services, EY said, “February 2024 recorded US$2.2 billion in PE/VC investments, 39% lower than the investments in February 2023 and 67% lower than January 2024. This is the second lowest monthly total for PE/VC investments since February 2021. The number of deals in February was, however, higher by 111% y-o-y.
Buyout investments valued at US$735 million were the highest segment across five deals in February 2024, compared to US$1.9 billion invested across four deals in February 2023, a 62% degrowth in value terms. Additionally, startup investments recorded US$554 million across 65 deals, reflecting a 23% decline in value terms year-on-year.
From a sectoral perspective, infrastructure emerged as the leading sector in February 2024, totaling US$412 million across seven deals. This was followed by technology, with US$359 million across 17 deals, and financial services, with US$253 million across 16 deals. Together, these sectors accounted for 46% of the total PE/VC investments in February 2024.
PE/VC exits in February 2024 were at US$2.9 billion across 39 deals, an increase of 303% in value terms y-o-y. Open market exits were the highest valued at US$2.8 billion across 25 deals.
Over the past three years, PE/VC backed IPO’s have experienced significant growth in tandem with buoyant performance of the Indian capital markets. The rise in valuation multiples demonstrated by mid and small-cap companies and strong demand for fast growing companies facilitated the absorption of numerous PE/VC backed IPOs. The increasing depth of the Indian markets has also played a crucial role in allowing PE/VC funds to divest substantial stakes post-listing in the open market via block trades at a minimal discount.
The buoyant capital markets have become an integral part of the Indian PE/VC ecosystem, offering rich valuations and delivering good returns to investors. As we step into 2024, the momentum in PE/VC exits has remained robust, fueled by favorable market conditions and strong domestic demand for fast growing companies. The initial two months have already recorded 15% of total exits seen in 2023. While the Indian markets have demonstrated resilience, global uncertainties persist and both growth and inflation remain significant concerns. The schedule for the Indian general elections has been declared and we expect the markets to be rangebound but volatile as investors and sentiments react to earnings announcements (for 1Q2024) starting next month and geopolitical events. We remain cautiously optimistic as the election super cycle unfolds in India and globally, with many large economies going to the polls in 2024.
Investments
February 2024 recorded PE/VC investments of US$2.2 billion, second lowest monthly total since February 2021. In value terms, February 2024 was 67% lower than January 2024 (US$6.7 billion) and 39% lower than February 2023 (US$3.7 billion). In volume terms, February 2024 recorded 120 deals, highest since July 2022, 40% higher compared to January 2024 (86 deals) and 111% increase y-o-y (57 deals in February 2023).
February 2024 recorded seven large deals (deals over US$100 million) aggregating US$1 billion, an 82% decline compared to January 2024 (US$5.7 billion in January 2024) and a 66% decline y-o-y in terms of value (US$3 billion in February 2023). The spot for the largest deal in February was shared by two deals, the rights issue in Byju’s of US$200 million and the investment by NIIF of US$200 million in iBus Network for a majority stake.
Buyouts had the largest share in PE/VC investments in February 2024 with investments worth US$735 million, compared to US$1.9 billion in February 2023, a 62% y-o-y decline in value terms. Startup investments was the second largest, with US$554 million across 65 deals in February 2024, compared to US$723 million in February 2023 across 39 deals, a de-growth of 23% y-o-y. Private investments in public equity (PIPE) were recorded an investment of US$553 million across 27 deals in February 2024 compared to US$336 million in February 2023. Growth investments recorded US$248 million across 13 deals in February 2024 compared to US$222 million across four deals in February 2023. Credit deals recorded a 71% decline y-o-y in terms of value (US$137 million in February 2024 vs. US$472 million in February 2023) however a 100% growth in terms of number of deals (10 in February 2024 vs. five in February 2023).
From a sector point of view, Infrastructure was the largest with investments of US$412 million recorded in February 2024, followed by technology and financial services with US$359 million and US$253 million, respectively. In terms of the deal count, technology was the largest, with 17 deals followed by financial services (16 deals) and retail and consumer products (15 deals).
Spotlight: PE-backed IPOs
The trend of PE/VC backed IPOs in India has gained momentum in recent years, reflecting the growing maturity and resilience of the Indian capital markets. The deepening of the capital markets and the premium they offer over private market transactions have created a promising exit route for PE/VC investors, with IPO’s generating substantial returns for investors who came on the cap table in the earlier stages of the company’s evolution.
The landscape of PE/VC backed IPOs has experienced dynamic shifts over the past few years. The year 2021 was a pivotal year, recording the highest ever number of PE/VC backed IPOs, resulting in exits at rich valuations to early PE/VC investors. However, the trajectory of PE/VC backed IPOs saw a notable decline in 2022 on account of sharp corrections in global equity markets amid rising inflation, interest rate hikes and geo-political conflicts. The year 2023 experienced a resurgence of sorts in India, marking the second highest number of PE backed IPOs (30 IPOs) as the buoyant Indian markets, backed by a stable economy, strong domestic inflows and controlled inflation, seemed to perform better than their peers in other markets.
Over the last five years, PE/VC backed IPO exits have realized US$9.3 billion for PE/VC investors across 112 IPOs. PE/VC backed IPO’s began to surge post COVID, and the last three years saw investors book exits worth US$7.7 billion from 92 IPOs.
In terms of sectors, financial services recorded the highest number of PE/VC backed IPOs over the last five years, followed by industrial products. Technology secured the third rank, while real estate and retail and consumer products both secured the fourth rank. These sectors collectively accounted for 58% of total PE-backed IPOs since 2019.
Overall, the rise of PE/VC backed IPOs in India reflects the positive evolution of the country’s capital markets. With a robust economy, and favorable demographics, India continues to attract attention from private equity investors seeking growth opportunities. As the Indian capital markets continue to evolve and mature, the trend of PE/VC backed IPOs is expected to remain a prominent feature.
Exits
February 2024 recorded 39 exits worth US$2.9 billion, compared to US$731 million in February 2023 across 12 deals.
Open market exits were the highest in February 2024 at US$2.8 billion across 25 deals, followed by five PE-backed IPOs at US$132 million.
The largest exit in February 2024 saw Brookfield exit from Data Infrastructure Trust for US$801 million.
Fundraise
February 2024 recorded total fundraise of US$1.3 billion, compared to US$1.1 billion raised in January 2024 and US$869 million in February 2023.
US$1 billion signed by Goldman Sachs and Mubadala to invest in private credit opportunities throughout Asia-Pacific region, with a particular focus on India was the largest fundraise in February 2024.
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