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Cautious Optimism: India's Private Equity Landscape in the First Half of 2024
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Investment momentum in India began tapering in the second half of 2022 following an unprecedented surge in growth between 2020 and H1 2022—a period when India’s private equity (PE) and venture capital (VC) landscape saw record-breaking investments. The investment landscape returned to pre-Covid-19 levels by 2023, and that trend has extended into the first half of 2024 (see Figure 1).

Figure 1

Indian PE-VC activity shows signs of stabilization as H1 2024 investments hold steady at H1 2023 levels

Indian PE-VC activity shows signs of stabilization as H1 2024 investments hold steady at H1 2023 levels

So far this year, India’s PE and VC markets have shown signs of stabilization, buoyed by a cautious sense of optimism. Investments have remained steady—between $23 billion and $24 billion— indicating the market is gradually finding its footing after a year of correction and recalibration.

The first half of 2024 has seen a dynamic shift in sectoral investments, with information technology (IT) and information technology enabled services (ITeS), healthcare, and consumer technology emerging as the salient sectors. IT/ITeS deal activity rebounded sharply, with H1 2024 investments (~$4.5 billion) already having reached approximately three times the total investments of 2023 (~$1.5 billion).

The IT/ITeS sector attracted the largest share of investments in H1 2024, growing from ~4% share of total deal value in 2023 to ~25% share in H1 2024. The surge of investment in IT/ITeS is primarily driven by large buyout deals, such as Perficient (~$3 billion invested by EQT) and Altimetrik (~$0.9 billion invested by TPG).

The consumer technology sector also saw significant growth, with deal value increasing by ~55% year over year (YOY) (from ~$1.5 billion in H1 2023 to ~$2.3 billion in H1 2024). B2C commerce remained the dominant subsector, attracting investments in assets such as Zepto (~$665 million) and Meesho (~$275 million). Other consumer tech assets, including Lenskart (~$200 million) and PocketFM (~$100 million), also saw investment activity. The resurgence of the broader VC and growth equity landscape contributed to this sector’s growth, as investors continued to back high-growth companies with strong market potential.

Healthcare remained a material sector (~17% share of total deal value in H1 2024), despite a decline in overall deal value (~$3.2 billion in H1 2024 vs. ~$3.8 billion in H1 2023). Medtech emerged as the dominant subsector accounting for a substantial ~35% of total healthcare deal value. Medtech’s increased allocations indicate growing investor confidence in quality-focused Indian players with superior price positioning, as evidenced by transactions such as Healthium Medtech (~$840 million invested by KKR) and Appasamy (~$300 million invested by Warburg Pincus).

Other healthcare assets, including Manipal Health (~$380 million), Apollo 247 (~$300 million), and Ujala Cygnus (~$120 million), also saw investor interest. In addition, banking, financial services, and insurance (BFSI) continues to attract significant investments (~12% share of total deal value in H1 2024), driven by scale deals involving companies such as NSE (~$700 million invested by ChrysCapital via a recently raised continuation fund) and Svatantra Microfin (~$235 million).

Despite the stabilization in deal activity during H1 2024, contrasting trends can be observed within India’s PE-VC landscape. While the broader deal-making environment remains cautious, the resurgence in venture capital and growth equity activity provided a much-needed boost to investments.  

VC and growth equity investments in India grew by ~25% YOY (from ~$5.2 billion in H1 2023 to ~$6.6 billion in H1 2024), signaling the reversal of a previous VC and growth equity tapering trend that began in H2 2021. The VC and growth equity investment rebound was primarily driven by robust growth in deal volumes (~35% YOY increase from ~580 in H1 2023 to ~790 in H1 2024).

Deal activity continued to gather momentum over the first half of the year, with deal value trending higher each month and peaking at ~$1.5 billion in June 2024. Consequently, the second quarter of 2024 marked the highest level of VC and growth equity activity seen over the past six quarters (Q3 2022 to Q4 2023)—a peak largely driven by continued investor interest in consumer technology assets. Notably, consumer technology accounted for all the VC and growth equity megadeals ($250 million+).

On the other hand, total PE deal value saw a modest decline of ~10% YOY in H1 2024 (from ~$19 billion in H1 2023 to ~$17 billion in H1 2024), primarily driven by a ~20% YOY drop in deal volumes (from ~80 deals in H1 2023 to ~65 in H1 2024).

The first half of 2024 witnessed several significant transactions, including seven $500-million+ deals, underscoring a strategic shift toward scale. PE investors increasingly favored larger, high-quality assets, leading to a ~15% rise in the average deal size (~$265 million in H1 2024 compared to ~$235 million in H1 2023).

Interestingly, PE investors have shown a strong preference for buyouts, with the share of buyouts in overall PE deal value increasing to ~55% in H1 2024 from ~47% in H1 2023. This trend reflects a strategic focus on acquiring controlling stakes in high-quality assets across sectors such as IT (Perficient, Altimetrik), healthcare (Healthium Medtech, Appasamy), and consumer (Dairy Day, Agro Tech Foods).

Global funds have played a crucial role in driving PE investments in India during H1 2024, with their share of the PE deal value surging to ~75% from ~50% in 2023. The top global PE funds invested ~$10 billion in India during H1 2024, already surpassing their total outlay in 2023 (~$8 billion). This increase is primarily attributed to their renewed interest in IT/ITeS, which accounted for ~40% of total invested value. EQT was the most active global investor, investing $3.5 billion+ across assets such as Perficient (IT/ITeS) and WSO2 (Software & SaaS).

At the same time, domestic funds remained material market participants during H1 2024, accounting for ~10% of the PE deal value. With record levels of dry powder and successful fund-raising efforts, domestic PE funds are well-positioned to sustain their momentum in the future. Notable fund raises by domestic PE funds in H1 2024 include ~$1.75 billion by Kedaara and a ~$700 million continuation fund by ChrysCapital.

Despite the absence of mega exits ($1 billion+ exit value), exit activity in H1 2024 reached a six-year high (see Figure 2). Exit deal values grew by ~40% YOY, from ~$9.5 billion in H1 2023 to ~$13.3 billion in H1 2024, thus reversing the exit activity tapering that began in H1 2021.

Figure 2

Exit activity in H1 2024 grew by approximately 40% over H1 2023 levels to reach a six-year H1 high

Exit activity in H1 2024 grew by approximately 40% over H1 2023 levels to reach a six-year H1 high

Notable exits included Healthium Medtech (~$840 million) and Mphasis (~$810 million). The BFSI and healthcare sectors witnessed significant exit activity— accounting for ~50% of total exit value—reflecting their continued appeal to both domestic and international investors.

The proportion of exits in emerging tech sectors, specifically consumer tech and fintech, increased by ~6 percentage points from H1 2023, propelled by marquee exits such as PolicyBazaar ($530 million) and Zomato (~$340 million). In terms of mode of exit, public market sales (primarily through block and bulk trades) emerged as the predominant exit route, accounting for ~55% of all exits (up from ~45% in H1 2023). Strategic sales also saw substantial growth, reaching ~$2.4 billion (a 3.5-fold increase compared to H1 2023), driven by key transactions such as Tata Consumer Products’ acquisition of Capital Foods (~$460 million).

In summary, H1 2024 has marked a period of recovery and stabilization for India’s PE-VC landscape. Resurging venture capital and growth equity activity, combined with strong exit activity and renewed global interest, underscore the resilience of India’s investment landscape and potential for sustained expansion.

As we move into the second half of 2024, the Indian PE-VC landscape appears poised for further stabilization and growth. The cautious optimism displayed by investors, coupled with a strategic focus on high-quality assets and a robust pipeline of deals and exits, paints a positive picture for the remainder of the year.

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