India’s Investment Insights Unlocked: VCCEdge Releases its 16th Annual Report on Private Markets

In 2024, private equity (PE) investments in India stabilized their momentum, with $24.2 billion in deal value, showing a 9% decline compared to the previous year’s total of $26.6 billion and expected to reach levels of 2023 by the year-end, as per the data from VCCEdge.

However, the composition of these investments shifted, with a greater emphasis on B2B model companies, late-stage companies, and a marked rise in funding for Ecommerce and Health Tech companies. This evolution illustrated a nuanced change in investment behavior as investors recalibrated their bets in tune with the evolving market in India.

While Private Equity (PE) investments in India saw a slight decline in 2024, the market remains far from saturated. Compared to more mature global PE ecosystems, India’s deal landscape is still in its early stages, highlighting significant growth potential despite the dip in activity.

In terms of business models, B2B companies raised more funding than B2C companies in 2024, a reversal of the trend from 2023. It indicated investors increasingly preferred to invest in sustainable and scalable ventures as Indian entrepreneurs too increasingly moved beyond the consumer-focused approach to build product-based companies.

Another interesting trend observed in 2024 pointed to reduced enthusiasm for Angel/Seed investments, with the share of Angel Investments in total PE investments reducing to 54% in 2024 from 60% in 2023. The decline was also reflected in the increase in average time taken for raising an angel seed round in 2024.

In terms of funding, companies raising Private Equity rounds made a comeback in raising funds, eclipsing total funding raised by Venture Capital rounds in 2024 – a trend that was reversed in Covid years. This indicated a growing interest in late-stage companies among investors as they sought stable returns over risky investments in early-stage ventures.

Within the sectors, Information Technology continued to dominate the PE landscape – accounting for half of the total PE volume, while Consumer sectors faced a decline in deal volume and value.

Among the new-age sectors, Ecommerce not only tipped Fintech as the most funded sector in 2024, a first in the last five years, it also saw an increase of nearly 80% in deal value. In terms of YoY growth, Travel & Mobility Tech and Health Tech saw highest increase in deal volume this year.

In conclusion, as the market matured, the pattern of investments became more refined, with investors increasingly prioritizing long-term value creation and sectoral diversification.

PE Funds Recalibrate Strategies
In 2024, PE funds in India witnessed a shift in strategy, with least number of new fund launches in last five years, a decline of 31% from 2023.

Funds with less than $100 mm target size continued to dominate fund launches, consistent with trends from the last five years. However, launch of larger funds saw a decline in 2024.

The total capital raised by the PE funds rose 61% from 2023. Considering the fewer fund launches in 2024, it suggested LPs are adopting a more judicious approach towards commitments, only focusing on General Partners with a proven track record.

Venture Catalysts was the most active VC fund Manager of 2024, with nearly half of its investments in Information Technology ventures. Elevation Capital was the most active PE fund manager in 2024.

PE Exits decline as valuation challenges slow down activity

Private equity (PE) exits in India declined in 2024, with a total exit value at $11.9 bn, down 11% from 2023. This decrease reflected the ongoing impact of subdued market conditions and valuation constraints, encouraging General Partners (GPs) to adopt a wait-and-watch approach in anticipation of improved returns.

Open Market exits continued to be the leading route of PE exits, with a 20% growth in deal volume compared to 2023. In terms of value too, Open Markets led the exits chart, helping investors collectively secure over $10.9 bn in exits.

Among sectors, most exits were made in Financials sector, with the sector also on the top for most exit value.

In 2024, partial exits represented 45% of all exits – where the exit type was available as per public disclosures – up from 22% in 2020, reflecting their growing prominence. Most partial exits were seen in Financials in 2024, indicating the sector’s strong potential for delivering exit opportunities alongside promising future growth.

Information Technology accounted for most full exits in 2024, representing over 40% of all such exits in the year.

Trends from the last five years indicated M&A exits were most prevalent in the Information Technology sector, accounting for over 60% of all exits in the sector. Financials meanwhile had the most Open Market exits among all sectors in the last five years, showing strong reliance on public markets for value realization.

M&A Activity rebounds in 2024

Mergers and acquisitions (M&A) in India have surged in 2024, with the total value of deals reaching $32.8 bn, marking a 18% rise over 2023.

This uptick in M&A activity reflected not only a resilient market but also a noticeable shift in the strategic priorities of both local and global companies looking to expand their footprint in India.

One of the significant trends in 2024 is the increase in Outbound M&A deals, which declined in 2023. The category saw a 20% increase on volume basis, coupled with a 25% rise in deal value, indicating increased penchant of domestic companies for global expansion. Domestic M&A deals continued to dominate in 2024, accounting for over 75% of deals in 2024.

Mean deal size of M&A declined 22% in 2024 to reach $47.1 mn, while Inbound M&A mean deal size remained the highest among all M&A types, at $155.2 mn, similar to trends from 2023.

Information Technology and Industrials continued to dominate M&A deal volume, accounting for 22% and 16% of all M&A deals in 2024.

Interestingly, Gujarat emerged as one of the prominent M&A destinations in the country, accounting for 55 deals in 2024, the fourth highest among all states, with Maharashtra leading the list.

Equity Capital Markets in India Thrives Amid Strong IPO and QIP Activity

In 2024, India’s equity capital markets (ECM) witnessed a strong resurgence, as the total value of deals reached $39.8 bn, a five-year high. This uptick, driven by strong public market performance and growing investor confidence, reflects a broader trend of renewed activity in the Indian stock markets.

Compared to 2023, 2024 saw 9% more IPO listings, 68% more QIP deals and 16% rise in Rights issues. The increase was more pronounced in deal value, with IPOs, QIPs and Rights Issues rising 160%, 96% and 56% respectively, indicating a broader spurt in deal activity in ECM.

One of the most notable changes in 2024 compared to 2023 is the increased number of IPOs, which have become the dominant route for private equity-backed companies to exit in the public markets.

With a high level of market optimism, particularly in the Industrials and Financials sector, several high-profile listings took place in 2024. On average, time taken for a company to reach IPO stage increased 17% in 2024.

In terms of regional trends, Maharashtra maintained its top position among states with over 160 deals in 2024, while Delhi remained the top destination for ECM deals among the cities.

About VCCEdge

VCCEdge is India’s premier financial research platform providing comprehensive data and information to subscribers for deal origination, deal structuring and valuations, gaining market insights, carrying out due diligence, and tracking competition. The platform has in-depth profiles of private and public companies, including detailed financials, deals including private equity, venture capital, M&A, equity capital market issues and debt offerings, key developments, and detailed data on investors and their portfolios.

Experience VCCEdge in action with a personalized demo, visit – https://bit.ly/49YyP1k

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