PE/VC roundup for 2023

Our monthly roundup highlights the Private Equity/Venture Capital investment activity in India.

A snapshot of PE/VC activity during 2023

According to the IVCA-EY monthly PE/VC roundup, 2023 witnessed US$49.8 billion worth of investments across 853 deals as compared to US$ 56,1 billion across 1,273 deals. The decline in deal volume was primarily caused by a sharp fall of 42% y-o-y in the number of deals in the startup segment (472 deals in 2023 vs. 815 deals in 2022).

Investments 
  • PE/VC investments continue to decline for the second consecutive year, recording US$49.8 billion in 2023, a 11% decline y-o-y (US$56.1 billion in 2022) and a 34% decline compared to 2021 when the PE/VC investments recorded an all-time high of US$75.9 billion.
  • PE/VC investments in 2023 declined despite an increase in the value of large deals (deals of value greater than US$100 million) compared to 2022 because of a significant decline of 33% in deal volume compared to both the preceding years (854 deals in 2023 vs 1,273 deals in 2022 and 1,269 deals in 2021). 2023 recorded large deals worth US$38.7 billion vs. US$36.6 billion in 2022.
  • The decline in deal volume was primarily caused by a sharp fall of 42% y-o-y in the startup segment (472 deals in 2023 vs. 815 deals in 2022). The dollar value of PE/VC investments in startups recorded an even bigger drop of ~53% (US$8.8 billion in 2023 vs. US$18.6 billion in 2022) causing it to lose its position as the largest segment of PE/VC investments, a title it held since 2021 despite a huge fall in investment value in 2022). The share of PE/VC investments in startups also fell to 17%, second lowest in the past 10 years and behind 2020, a year significantly impacted by the pandemic and the ensuing lockdowns.
  • Growth investments was the largest segment for PE/VC investments this year with US$17.1 billion invested across 147 deals, a 4% increase in terms of value and a 21% decline in terms of volume compared 2022 (US$16.4 billion across 186 deals), with four US$1 billion+ deals compared to just one last year.
  • Buyouts deals came in second with 56 deals worth US$12 billion, a 14% growth y-o-y in terms of value (US$10.4 billion across 53 deals in 2022). This growth was mostly due to three US$1 billion+ deals.
  • The largest deals in 2023 include two growth investments – Temasek’s US$2 billion investment in Manipal Health and US$2 billion investment in Digital Edge DC, a 300MW hyperscale facility in Navi Mumbai by NIIF, AGP DC InvestCo and Digital Edge (Singapore) Holdings.
  • PIPEdeals recorded the highest growth this year with a 110% increase y–o-y (US$8.4 billion across 111 deals in 2023 vs. US$4 billion across 63 deals in 2022). PIPE investments were also the highest ever in 2023.
  • Credit investments had the sharpest fall in deal volume recording 67 deals in 2023 compared to 156 deals in 2022, leading to a steep decline of 48% y-o-y in the dollar value of credit investments (US$3.5 billion in 2023 vs US$6.7 billion in 2022).
  • The fall in pure play PE/VC investments was pronounced in 2023, a 25% y-o-y decline with US$30.2 billion recorded across 741 deals compared to 2022 (US$40.2 billion across 1,103 deals). This was however offset by PE/VC investments in infrastructure and real estate asset classes which recorded a y-o-y growth of 23% in 2023 (US$19.6 billion across 112 deals in 2023 vs US$16 billion across 170 deals in 2022).
  • From a sector point of view, infrastructure was the leading sector in 2023 with US$11.6 billion invested across 57 deals, a growth of 29% y-o-y (US$9 billion across 75 deals in 2022). PE/VC investments in infrastructure in 2023 were the second highest ever. Real estate was the second largest sector in 2023 with US$8 billion recorded across 55 deals, a 15% increase y-o-y (US$6.9 billion across 95 deals in 2022) and the highest ever value of PE/VC investments in the sector.  Financial services, a traditionally favoured sector by PE/VC investors, was the third largest in 2023, unlike the previous two years, when it was the largest. PE/VC investments in the financial services sector recorded a sharp fall of 39% y-o-y, with US$6.4 billion recorded across 161 deals in 2023. This was mainly due to a sharp decline in the number of Fintech deals (174 deals in 2022 to 76 deals in 2023), a segment preferred by PE/VC investors. Healthcare sector was the fourth largest, recording the highest ever value of PE/VC investments in 2023 at US$5 billion across 63 deals, almost double the value invested in 2022. This was largely on the back of the US$2 billion Temasek-Manipal deal.
  • Business and professional services and industrial products recorded the highest growth y-o-y of 319% and 299% respectively.
  • Traditionally favoured sectors like e-commerce and technology recorded a y-o-y decline of 55% and 39% respectively in terms of dollar value invested, mainly due to the fall in PE/VC investments in startups. PE/VC investments in the e-commerce sector were the lowest in seven years.

Exits

  • In 2023 exits were valued at US$24.8 billion, a 36% growth compared to 2022 (US$18.3 billion), but a 37% decline compared to 2021 (US$39.6 billion). In terms of volume, exits in 2023 were the highest ever, a 22% growth compared to 2022 (303 deals in 2023 vs 248 deals in 2022).
  • Open market exit was the largest segment in 2023, with US$12.8 billion recorded across 131 deals, a growth of 94% y-o-y. 2023 also recorded the second highest number of PE-backed IPOs ever (30 IPOs).
  • In 2023, secondary exits and PE-backed IPOs recorded a 37% (US$6.6 billion in 2023 vs US$4.8 billion in 2022) and 28% (US$1.4 billion in 2023 vs US$1.1 billion in 2022) growth, respectively.
  • In 2023, strategic exits and buybacks recorded a 33% (US$3.5 billion in 2023 vs US$5.2 billion in 2022) and 13% (US$486 million in 2023 vs US$562 million in 2022) decline, respectively.
  • The largest exit in 2023 was by Tiger Global and Accel where they sold a combined 4% stake in Flipkart to Walmart for US$1.4 billion.
  • From a sector point of view, the financial services sector had the highest value of exits in 2023 (US$7.4 billion across 80 deals) a 94% growth when compared to 2022 (US$3.8 billion across 40 deals). The e-commerce sector recorded the second highest value of exits in 2023 (US$2.9 billion across 35 deals), a 67% growth compared to 2022 (US$1.7 billion across 32 deals). Healthcare was the next big sector with exits worth US$2.8 billion across 16 deals, a 32% growth when compared to 2022 (US$2.1 billion across 21 deals).
Fundraise 
  • 2023 recorded an 8% decline in fundraising, with US$15.9 billion in fundraises across 102 funds compared to US$17.4 billion raised across 99 funds in 2022 and a 105% growth compared to US$7.7 billion raised across 73 funds in 2021.
  • The largest fundraise in 2023 saw New York-based Tiger Global Management raise US$2.7 billion for its 16th Fund with a focus on investments in Indian startups. Kotak Investment Advisors’ US$1.3 billion fundraise of its Kotak Special Situations Fund 2 targeted at equity, debt capital and hybrid instruments across sectors was the second largest.

 

   Quarterly Trend Analysis (3Q2023) - Investments

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