Substantial Decline in PE and VC Investments in India During February

In a significant downturn, private equity and venture capital investments in India have seen a stark decline, falling to $2.2 billion in February, representing a 39% decrease from the same month in the previous year.

Investment Drop in Detail

The total amount of investments in February, which stood at $2.2 billion, marked a substantial fall when juxtaposed with the $3.7 billion figure from the year prior, illustrating a clear cooling off in the investment space. This downturn also represents a 67% plunge from the preceding month's investment inflows.

While the frequency of deals seemed to be on the rise, with February witnessing 120 transactions in contrast to January's 86 and February of the previous year's 57, the capital involved in these deals did not match up, signifying a trend of reduced deal sizes rather than reduced activity.

Context and Optimism

According to a report released by the industry group IVCA and the consultancy firm EY, this downward shift in PE and VC investments is the second most pronounced since February 2021. Despite this, industry experts maintain a cautiously optimistic outlook, bearing in mind the succession of elections occurring both within India and on the international stage throughout 2024.

The report also gives insight into the composition of these investments, highlighting that there were only seven large deals valued at $100 million or more in February. These collectively amounted to $1 billion, an 82% decrease from January and a 66% drop from the same period in the previous year.

Among the largest deals were Byju's $200 million rights issue and the National Investment and Infrastructure Fund's (NIIF's) equal investment in iBus Networks. Moreover, buyouts contributed $750 million to the total investment sum for the month, with startup ventures attracting $554 million across 65 deals.

Sector Breakdown and Fundraising

Infrastructure emerged as the leading sector in February's investment activity with $412 million, with technology and financial services following at $359 million and $253 million respectively.

February also witnessed 39 exit deals valued at a hefty $2.9 billion, a significant increase over the $731 million recorded in the same month of the previous year. On the fundraising front, February achieved an impressive $1.3 billion, exceeding both the prior month's and the prior year's figures of $1.1 billion and $869 million, respectively.

investment, decline, PEVC