Private equity and venture capital inflows into India crossed $61 billion in 2022, down 12 per cent on the year on global headwinds, but its share of investments in the Asia-Pacific region rose to a fifth from less than 15 per cent a year ago

Bain & Company’s ‘India Private Equity Report 2023’ said the current year will be a year of cautious optimism, with momentum in select sectors that are driven by domestic consumption, and export-oriented sectors with a long-term strategy. Investors looking to invest in India are likely to focus on unit economics and value creation, the report said.

In 2022 private equity deal activity softened globally due to geopolitical tensions in Europe, and global macro headwinds such as rising inflation in major economies, tightening of monetary policies by central banks, and supply-demand gaps.

As read: India grabs higher share of PE investments in Asia as China declines

Across most regions, PE and VC investment fell 15-30 per cent and comparatively speaking, India fared well, driven by a positive economic outlook, large consumption opportunities, improved digital infrastructure, and some portion of investments moving away from China.

There was a deceleration in activity in the second-half of 2022, with the first-half seeing close to $40 billion worth of deals. Most of the deals were in traditional sectors such as banking, financial services, insurance, energy, and healthcare.

Some of the major deals were Bodhi Tree System’s $1.8-billion investment in Viacom18, Advent, and Carlyle investing $1.1 billion in YES Bank and Vista Equity Partners investing about $1 billion in Securonix.

Consumer technology and internet companies that had ridden high on Covid-driven demand saw a sudden downshift in consumption, and the route of tech stocks in public markets sent valuations plummeting, and this spilled over into private markets as well.

More than 2,000 deals were transacted in 2022, with venture capital and growth equity accounting for almost 90 per cent of deals, though with reduced cheque sizes.

PE deal value was robust though volumes were lower, and there was a shift in the contribution of megadeals as $1-billion investments slowed, with buy-outs slowing significantly amidst tighter credit markets and mismatched valuations delaying deal closures, the report said.

Exits were also muted during the year, slowing to $24 billion from an all-time high of $36 billion in 2021. Here, too, traditional sectors dominated the share of exits greater than $100 million, with healthcare and manufacturing showing the largest increase in exit value.

KKR’s exit from Max Healthcare for $1.6 billion grabbed headlines, followed by other large exits such as Everstone’s exit from Sahyadri Hospitals and Carlyle and British International Investment’s IPOs of Medanta Medicity (Global Health) and Rainbow Hospitals.

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