Private equity and venture capital investments in India-based companies have witnessed a 15% decline, amounting to $6 billion across 139 deals, during the third quarter of 2023, according to data provided by Venture Intelligence, a research service specializing in private company financials and transactions. This decline is in comparison to the same period in 2022 when $7 billion was invested across 327 deals. Furthermore, the investment amount also saw a substantial 49% decrease compared to the immediate preceding quarter, which recorded $11.7 billion invested across 202 deals.
“While there is clearly no returning to the lofty heights of 2021 any time soon, recent weeks have seen global investors like KKR and India-focused firms like Westbridge Capital, MEMG Family Office, IIFL AMC, and India Resurgence Fund stepping up their investment activity. With continued strength in the public markets (including IPOs) and the large amounts of ‘dry powder’ available with India-dedicated funds, a few more ‘confidence building’ transactions will help catalyze the ‘trickle-down’ effect into private markets and earlier stage companies,” commented Arun Natarajan, Founder of Venture Intelligence.
The cumulative figures for private equity and venture capital investments in the first nine months of 2023 amounted to $23.6 billion across 542 deals. This represents a notable 38% decrease compared to the same period in 2022, when $38.1 billion was invested across 1,141 deals.
The third quarter of 2023, however, saw 16 mega deals worth $4.5 billion, surpassing the numbers from the same period in 2022, which recorded 13 such investments worth $3.8 billion. In the immediate preceding quarter, there were 22 mega deals amounting to $9.7 billion. Notably, the $1 billion investment by the Qatar Investment Authority in Reliance Retail Ventures accounted for 17% of the overall private equity and venture capital investments in Q3 2023.
Among the top deals in Q3 2023 were the buyout of fertility clinic chain Indira IVF by Baring Asia for $700 million and The Carlyle Group’s $500 million investment in engineering services BPO firm Quest Global. Global private equity investor KKR also made two significant investments during the quarter: a $275 million investment in logistics tech startup Leap India and a $250 million investment in Reliance Retail Ventures.
Q3 2023 marked the creation of one new unicorn in the Indian startup ecosystem – quick-commerce startup Zepto. This development ended an 11-month drought in the formation of private companies valued at $1 billion and above. Unicorn startups in India collectively attracted close to $400 million in Q3 2023, which reflects a 16% decrease compared to the same period in the previous year, when $500 million was invested in unicorn startups. Furthermore, it represents a 44% drop when compared to the preceding quarter, which recorded $700 million invested in unicorn startups.
The investment landscape in India’s private equity and venture capital sector continues to evolve amid various economic factors and global dynamics. While the numbers for Q3 2023 show a decline in investments, the resurgence of global investors and India-focused firms points toward a cautiously optimistic outlook for the sector. As the year progresses, the industry will be closely watched to gauge how it adapts to these changes and whether it can regain momentum in the post-pandemic landscape.
