July 2024 recorded PE/VC Investments worth US$2.7 billion across 81 deals: EY-IVCA Report

• Buyout investments were the highest deal type in July 2024, followed by start-up investments
• PE/VC exits in July 2024 were at US$2.5 billion, a 16% decline y-o-y
• Infrastructure was the top sector in July 2024, recording US$690 million

Mumbai, 14 August 2024: According to the IVCA-EY monthly PE/VC roundup, PE/VC investments in July 2024 were 35% lower than June 2024 in value terms.

Vivek Soni, Partner and National Leader, Private Equity Services, EY said, “July 2024 recorded US$2.7 billion in PE/VC investments, a decline of 42% compared to July 2023 and 35 % lower than June 2024. The number of deals in July 2024 was higher by 19% y-0-y.

In July 2024, pure play PE/VC investments reached US$1.8 billion, a decline of 56% compared to July 2023 (US$4 billion) and were 51% lower compared to June 2024 (US$3.6 billion). The number of deals was higher by 8% y-o-y (69 deals in July 2024 vs. 64 deals in July 2023). Investments in the real estate and infrastructure asset class in July 2024 (US$926 million) were higher by 67% y-o-y compared to July 2023 (US$554 million) and 82% higher compared to June 2024 (US$508 million).

Buyout investments was the largest deal type in July 2024 at US$1.2 billion, accounting for 45% of the overall investments in July 2024. This was followed by start-up investments (US$729 million). From a sector point of view, infrastructure was the top sector in July 2024, recording US$690 million in PE/VC investments.

PE/VC exits were at US$2.5 billion across 16 deals in July 2024, a 16% decline y-o-y (US$3 billion in July 2023). Strategic exits in July 2024 accounted for 65% of overall exits by value (US$1.6 billion).

Buyouts enable PE/VC investors to acquire the controlling stake in a company, allowing them to make strategic decisions and turn around underperforming companies. The acquisition of controlling stakes in well-established companies with strong fundamentals offers superior risk adjusted returns to PE/VC investors. Which is why, despite global headwinds and uncertainties, buyouts are emerging as a preferred strategy for Large PE/VC investors. Please see the spotlight section for more details.

While the Indian markets have demonstrated resilience and continue to show strong signals, the second half of 2024 appears to have had a weak start. We expect PE/VC investors to take a cautious approach as concerns over global uncertainties, inflation and geopolitical tensions play out, influencing the confidence and willingness of investors to deploy additional capital. The announcements made in the union budget have been overall net positive for the PE/VC sector, and with the Angel Tax removal, we expect to see a pickup in the start-up space. We remain cautiously optimistic about the Indian PE/VC outlook for the rest of 2024.

Investments

PE/VC investments in July 2024 (US$2.7 billion) were 42% lower than July 2023 (US$4.6 billion) and 35% lower than June 2024 (US$4.1 billion). In terms of the number of deals, July 2024 recorded 81 deals 19% increase compared to July 2023 (68 deals).

July 2024 recorded six large deals (deals valued US$100 million), aggregating US$1.5 billion, a 58% decline y-o-y in terms of value (US$3.6 billion across 10 deals in July 2023). The largest deal in July 2024 was Brookfield’s investment of US$550 million in Leap Green Energy.

Buyout investments had the largest share in July 2024, with US$1.2 billion invested across five deals compared to US$2.9 billion across six deals in July 2023, marking a decline of 58%. Start-up investments were the second largest, with US$729 million invested across 48 deals in July 2024, a growth of 31% compared to US$558 million across 40 deals in July 2023. Growth investments ranked third highest in July 2024 (US$518 million across 12 deals) with 55% growth compared to July 2023 (US$334 million across eight deals). This was followed by credit investments (US$196 million across nine deals), a 44% decline compared to July 2023 (US$352 million recorded across seven deals). Lastly, PIPE investments stood at US$33 million across seven deals compared to US$485 million across seven deals in July 2023, a decline of 93%.

From a sector perspective, infrastructure was the leading sector  in July 2024, with US$690 million in PE/VC investments across six deals, followed by e-commerce (US$404 million) and healthcare (US$307 million). These sectors cumulatively accounted for 52% of total PE/VC investments in July 2024.

Spotlight: pure play buyouts

Over the last 4-5 years, the buyout investment strategy has gained significant momentum within the broader Indian PE/VC landscape. In recent  years, we have seen a rise in buyouts, complemented by large deal sizes despite ongoing uncertainties and geopolitical tensions.

Buyout transactions have evolved from targeting small companies to encompassing large-cap deals. Some of these transactions  involved taking control of long-standing businesses with strong growth potential.

Taking the last five-year’s view (since 2019), buyouts have ranked third among investment strategies for PE/VC investors, following start-up and growth investments. They have recorded a cumulative value of US$44.3 billion across 165 deals,  accounting for 20% of overall PE/VC investments in the pure play class. Compared to buyouts in real estate and infrastructure asset classes, pure play buyouts were higher by 13% in value terms. (US$39.3 billion across 147 deals).

After reaching an all-time high of US$17.1 billion, buyouts experienced a 78% year-on-year decline in 2022. However, they  rebounded in 2023, registering an impressive 98% growth to reach US$7.4 billion, compared to US$3.8 billion in 2022. Buyouts in 2024 (till July) have already accounted for 80% of the buyout investments in the previous year (US$5.9 billion).

In the pure play asset class, buyouts have accounted for 20%, 12%, 26%, 9%, 23% and 29% of the overall pure play PE/VC investments each year since 2019 to 7M2024. This growing trend highlights the preference of PE/VC investors for buyouts as an investment strategy.  Key PE funds   involved in buyout deals include Blackstone, Advent, BPEA EQT, Warburg, CVC, TPG, PAG and KKR.

From a sector perspective, the technology sector led both in terms of value and volume (US$18.5 billion across 31 deals). Financial services followed with buyouts totaling US$7 billion. Pharmaceuticals ranked third with buyouts totaling US$5.6 billion. These sectors accounted for 70% of the overall buyouts since 2019. Other sectors that followed were healthcare (US$4 billion), industrial products (US$3.7 billion), and retail and consumer products (US$1.5 billion).

Overall, the buyouts trend in India reflects the increasing maturity of the PE/VC market and the growing confidence of investors in their ability to identify and unlock value in not only the established businesses but also in high potential early-stage companies.

Notes to Editors

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About IVCA

The Indian Private Equity & Venture Capital Association (IVCA) is the apex body promoting the Alternative Investment Funds (AIFs) in India and promotes stable, long-term capital flow (Private Equity (PE), Venture Capital (VC) and Angel Capital) in India.

With leading VC/ PE firms, institutional investors, banks, corporate advisers, accountants, lawyers, and other service providers as members, it serves as a powerful platform for all stakeholders to interact with each other. Being the face of the industry, it helps establish high standards of governance, ethics, business conduct and professional competence. With a prime motive to support the ecosystem, it facilitates contact with policy makers, research institutions, universities, trade associations and other relevant organizations. Thus, support entrepreneurial activity, innovation, and job creation.