PE/VC roundup 1H2024

A snapshot of PE/VC activity during 1H2024

According to the IVCA-EY monthly PE/VC roundup, PE/VC investments in 1H2024 were 30% higher than 2H2023 in value terms.

Investments

On a half-yearly basis, PE/VC investments in 1H2024 by value recorded an 8% increase y-o-y, and 30% compared to 2H2023 (US$31.5 billion in 1H2024 vs. US$29.3 billion in 1H2023 and US$24.2 billion in 2H2023). 1H2024 has already accounted for 59% of last year’s investment value and we expect the bullish trend to continue. In terms of number of deals, 1H2024 recorded an increase of 49% compared to 1H2023 and 48% compared to 2H2023 (654 deals in 1H2024 versus 439 deals in 1H2023 and 441 deals in 2H2023).

Pure play PE/VC investments (excluding real estate and infrastructure sectors) in 1H2024 (US$18.6 billion) were 20% higher compared to 1H2023 (US$15.5 billion) and 12% compared to 2H2023 (US$16.6 billion). It accounted for 59% of total PE/VC investments in 1H2024. Meanwhile, investments in the real estate and infrastructure asset class grew by 70% compared to 2H2023 (US$12.8 billion in 1H2024 versus US$7.6 billion in 2H2023).

In 1H2024, there were 69 large deals (above US$100 million) totalling US$22.6 billion compared to 61 large deals aggregating to US$18.1 billion in 2H2023, a 25% growth sequentially. However, the value of large deals in 1H2024 was 4% lower y-o-y, compared to 1H2023, which recorded 64 large deals aggregating to US$23.6 billion. In value terms, large deals accounted for 72% of the overall PE/VC investments in 1H2024. The largest deals in 1H2024 saw Brookfield acquire ATC India Tower Corporation for US$2 billion, followed by a tie of two deals valued at US$1.5 billion: Macquarie’s acquisition of Vertelo, and ADIA and KKR’s investment in Reliance Retail Ventures warehousing assets.

Buyouts were the highest with US$9.9 billion invested across 28 deals, 42% y-o-y increase in value terms (US$7 billion across 30 deals in 1H2023) and 96% higher compared to 2H2023 (US$5.1 billion across 28 deals in 2H2023). This was followed by growth investments, at US$7.6 billion across 88 deals, 27% y-o-y decline (US$10.5 billion across 72 deals in 1H2023 and US$6.6 billion across 75 deals in 2H2023). Credit investments recorded the highest y-o-y increase of 64% and three times increase in number of deals, at US$5.6 billion across 141 deals (US$3.4 billion across 47 deals in 1H2023 and US$3.7 billion across 40 deals in 2H2023).

Start-up investments recorded US$4.9 billion across 322 deals vs. US$3.8 billion across 249 deals in 1H2023. PIPE deals were the lowest with US$3.5 billion across 75 deals vs. US$4.7 billion across 41 deals in 1H2023, and US$3.7 billion across 70 deals in 2H2023.

From a sector perspective, infrastructure was at the top in 1H2024 (US$7.1 billion across 44 deals), marginally lower than the US$7.4 billion across 35 deals in 1H2023. Real estate secured second rank with US$5.7 billion invested across 70 deals, marking an11% decrease from US$6.4 billion across 28 deals in 1H2023. The financial services sector took the third spot with US$5.4 billion recorded across 111 deals, a 27% y-o-y increase (US$4.3 billion across 79 deals in 1H2023). Other traditionally favoured sectors by PE/VC investors, such as e-commerce and technology, grew by 74% and 24% y-o-y, respectively. However, investments in healthcare declined by 32% y-o-y. 

Spotlight: PE/VC exit trends

PE/VC exit activity has surged over the past few years in line with the buoyant performance of the capital markets. The growing depth of India’s capital markets is creating a conducive environment for PE/VC exits, generating substantial returns for the PE/VC investors.

Taking a decadal view, PE/VC exits worth US$167.8 billion across 2,368 deals were recorded. However, PE/VC exits surged during the last five years (since 2019) recording two-thirds of the exits worth US$110.9 billion across 1,300 deals.

Year 2021 recorded the highest exits worth US$39.6 billion where in the PE/VC investors capitalized on buoyant capital markets selling stakes in listed positions at elevated valuations. In terms of the number of deals, year 2023 recorded the highest deals (304 deals).  So far, 2024 has already recorded 159 deals and could potentially become the best year for exits if this trend persists.

After reaching an all-time high in 2021, PE/VC exit values experienced a 54% year-on-year decline in 2022. . However, there was a significant rebound in 2023, with exit values registering an impressive 36% growth to reach US$24.9 billion, compared to US$18.3 billion in the previous year. This surge was primarily fueled by a substantial uptick in open market exits, which soared by 94% year-on-year to reach US$12.8 billion in 2023 from US$6.6 billion in 2022.

In terms of exit type distribution over the last 5 years, open market exits dominated, comprising 36% of total exits since 2019. Secondary exits followed at US$30 billion. Strategic and PE backed IPOs secured third and fourth rank recording exits worth US$26.4 billion and US$10 billion, respectively. Lastly exits through buyback stood at US$4 billion. In terms of the number of deals, open market exits recorded the highest number of exits (491) accounting for 38% of the overall exits. This was followed by strategic exits (411) and secondary exits (227). Exits through IPO and buyback recorded 130 and 41 exits, respectively.

From a sector perspective, the technology sector dominated with exits worth US$26.3 billion. Financial services followed closely with exits totaling US$26.1 billion. E-commerce ranked third with exits totaling US$10.1 billion. These sectors accounted for 56% of the overall exits since 2019. Other sectors that followed were infrastructure (US$9.4 billion), healthcare (US$8.4 billion) and real estate (US$7.4 billion).

Exits

On a year-on-year (y-o-y) basis, exits recorded 18% increase in terms of value in 1H2024 (US$11 billion) compared to 1H2023 (US$9.4 billion) and a 29% decline compared to 2H2023 (US$15.5 billion). Further, the deal value of 43 deals was undisclosed, which too impacted the aggregate exit value reported. The number of exits in 1H2024 (159 exits) was higher by 15% compared to 1H2023 (138 deals) and declined by 4% compared to 2H2023 (166 deals).

Exits via open market were the highest, with US$7.9 billion recorded across 85 deals, accounting for 72% of all exits in 1H2024. On a y-o-y basis, open market exits recorded a 69% growth in value (US$4.7 billion across 60 exits in 1H2023). Next in line were secondary exits at US$1.6 billion (27 deals), a 47% y-o-y decline (US$3.6 billion in 1H2023). Strategic exits recorded 29 deals worth US$768 million, a 37% y-o-y decline in value terms (US$1.2 billion across 42 deals in 1H2023).

PE-backed IPOs recorded US$753 million in exits across 18 IPOs in 1H2024 compared to US$262 million recorded across five IPOs in 1H2023, a growth of 187%.

From a sector perspective, the financial services sector recorded the highest value of exits in 1H2024 at US$3.5 billion across 45 deals a 29% growth y-o-y (US$2.7 billion across 31 exits in 1H2023). Healthcare was the next significant sector with 15 exits worth US$1.7 billion, a 14% higher increase compared to 1H2023 (US$1.5 billon across 11 exits).

Fundraise

1H2024 recorded US$6.7 billion in fundraises across 45 funds, 34% lower compared to fundraises of US$10.2 billion recorded in 1H2023. A 17% increase was noticed compared to US$5.7 billion raised in 2H2023.

US$1.7 billion raised by Kedaara was the largest fundraise in 1H2024 targeted for banking, healthcare, consumer, and software sectors.