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Report: PE/VC Investment in India Declines 44% to $3.5B

2023-06-21

The investment in the country by private equity and venture capital funds continued to decrease in May. The overall values saw a decline of nearly 44%, amounting to $ 3.5 billion. The report, which was released by industry lobby IVCA and consultancy firm EY, revealed that in May 2022, the dedicated funds had invested $ 6.2 billion, while in April 2023, they invested $ 7.4 billion. These figures represent a decrease of 44% and 52% respectively.

Vivek Soni, a partner at the firm, mentioned that despite seeing some recovery in tech sector indices and global tech giants, the sentiment towards tech sector investments in India has been lackluster. He also noted that fundraising by Indian startups has been slow. Soni stated that although the funds have a significant amount of dry powder due to substantial fundraises over the past year and a half, they are cautious about deployment. They are mainly focused on managing their existing portfolios, which are struggling to maintain growth and improve margins.

Soni added that only healthcare and financial services have witnessed some investments. He expressed optimism about the medium- to long-term outlook, stating that overall deployments in 2023 will exceed the previous year's numbers.

In May 2023, the total deal activity in terms of volume stood at 71 transactions, which is 42 percent lower compared to the same period the previous year.

The report also highlighted that growth investments decreased by 4 percent, amounting to $ 1.9 billion across 17 deals, as opposed to $ 2 billion invested across 19 deals in May 2022. Additionally, pureplay PE/VC investments reached $ 2 billion across 62 deals, representing a 52 percent decrease in value.

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