3Q2024 recorded PE/VC Investments worth US$8.8 billion across 283 deals; 40% y-o-y decline: EY-IVCA Report

• PE/VC deal volume in 3Q2024 at 283 deals grew by 26% against 225 deals in 3Q2023
• Buyout investments were the highest deal type in 3Q2024, followed by growth investments
• PE/VC exits in 3Q2204 were at US$8.2 billion, a 8% decline y-o-y
• The Financial Services was the most active sector  in 3Q2024withUS$1.5 billion in investments

Mumbai, 17 October 2024: According to the IVCA-EY monthly PE/VC roundup, PE/VC investments in 3Q2024 recorded at US$8.8 billion 45% lower than 2Q2024 in value terms.

Vivek Soni, Partner and National Leader, Private Equity Services, EY said, “3Q2024 recorded US$8.8 billion in PE/VC investments, 40% lower than investments in 3Q2023 and 45% lower than in 2Q2024. The number of deals in 3Q2024 was 26% higher year-on-year.

The pure play PE/VC investments in 3Q2024 (US$6.5 billion) declined by 30% compared to 3Q2023 (US$9.3 billion). The real estate and infrastructure asset class also saw a decline of 57% year-on-year (US$2.3 billion in 3Q2024 vs. US$5.3 billion in 3Q2023). Compared to 2Q2024, pure play PE/VC investments declined by 46% (US$12 billion in 2Q2024), and real estate and infrastructure investments declined by 43% (US$4 billion in 2Q2024). In terms of the number of deals, both pure play and real estate and infrastructure asset classes grew by 26% year-on-year.

Buyout investments were the highest deal type in 3Q2024 at US$2.7 billion, followed by growth investments at US$2.6 billion. From a sector point of view, financial services was the top sector in 3Q2024, recording US$1.5 billion, followed by infrastructure (US$1.5 billion).

PE/VC exits were at US$8.2 billion across 71 deals in 3Q2024, 8% lower than in 3Q2023 (US$8.9 billion). Open market exits in 3Q2024 accounted for 51% of all exits by value (US$4.2 billion).

The COVID-19 pandemic has significantly changed perceptions of healthcare needs, driving growing demand for clinics, pharmaceuticals, and medical devices. As people adopt more health-conscious lifestyles and become increasingly aware of wellness, this shift has attracted PE/VC investors, particularly in the start-up space, who are seeking innovative healthcare solutions. Please see the spotlight section for more details.

While the deal momentum showed a slight uptick in September compared to July and August, overall private equity and venture capital activity in 3Q2024 declined in both value and volume compared to the previous quarter. A key reason is the drop in large deals (deals of value greater than US$100 million), often driven by the widening gap between buyer and seller expectations. Geopolitical tensions have created uncertainty, dampening investment sentiment as investors become more cautious leading to slowing deal-making. This sluggishness may persist if global uncertainties continue. However, with India's fiscal health remaining strong, our outlook remains cautiously optimistic.”

Investments

PE/VC investments in 3Q2024 totaled US$8.8 billion, reflecting a 40% decline year-on-year compared to US$14.6 billion in 3Q2023. This represents a 45% decrease from in 2Q2024 (US$16 billion). In terms of the number of deals, 3Q2024 recorded 26% year-on-year growth compared to 3Q2023 and a 12% decline compared to 2Q2024 (283 deals in 3Q2024 vs. 225 deals in 3Q2023 and 321 deals in 2Q2024).

3Q2024 recorded 21 large deals (deals of value greater than US$100 million), aggregating to US$5 billion, a 56% year-on-year decline in value compared to 36 large deals aggregating to US$11.5 billion in 3Q2023, and 57% lower than 2Q2024 (US$11.7 billion across 35 deals).

Pure play PE/VC investments (excluding real estate and infrastructure) recorded US$6.5 billion in 3Q2024, 30% lower than in 3Q2023 (US$9.3 billion), and 46% lower than in 2Q2024 (US$12 billion). Pure play PE/VC investments accounted for 74% of all PE/VC investments in 3Q2024. The largest deal in 3Q2024 for pure play PE/VC investments was the acquisition of GeBBS Healthcare Solutions by EQT from ChrysCapital for US$860 million.

Like 2Q2024, the financial services sector received the most PE/VC investments in 3Q2024 (US$1.5 billion across 52 deals), growing by 27% year-on-year compared to 3Q2023 (US$1.2 billion across 40 deals). Infrastructure ranked second  in terms of value in 3Q2024 (US$1.5 billion across 20 deals), but it declined by 62% year-on-year compared to 3Q2023 (US$3.9 billion across 14 deals). Technology ranked third, recording US$1.3 billion across 32 deals, a 14% increase year-on-year compared to 3Q2023 (US$1.1 billion across 35 deals). These sectors collectively accounted for 49% of the total PE/VC investments in 3Q2024.

In 3Q2024, the private equity and venture capital landscape experienced varied trends across deal segments:

• Buyouts: Largest segment at US$2.7 billion across 13 deals, down 25% year-on-year from US$3.6 billion across 18 deals in 3Q2023.
• Growth investments: Second largest, totaling US$2.6 billion across 49 deals, a 40% decline from US$4.4 billion across 39 deals in 3Q2023.
• Start-up investments: Only segment to grow year-on-year, recording US$2.3 billion across 157 deals, up 21% from US$1.9 billion across 108 deals in 3Q2023.
• Credit investments: Amounted to US$631 million across 25 deals, a 56% decline from US$1.4 billion across 18 deals in 3Q2023.
• PIPE investments: Lowest share at US$467 million across 39 deals, reflecting an 85% decline from US$3.2 billion across 42 deals in 3Q2023.

Spotlight: PE/VC trends in the Life Sciences Sector

Robust growth in PE/VC investments

Over the last five years, PE/VC investments in India's life sciences sector have been impressive.

Since 2019, this sector has attracted a significant sum of US$25 billion in PE/VC investments. While the healthcare sector recorded an investment of US$13.9 billion accounting for 56% of overall investments, the pharmaceutical sector recorded an investment of US$11.1 billion, accounting for 44% of the overall investments.

In 2023 we witnessed a historic high in PE/VC investments within the life sciences sector, recording US$6.3 billion across 82 deals.

The substantial rise can be  attributed to a notable shift in the large deals (deals of value greater than US$100 million) and an increasing number of buyouts. Since 2019, the life sciences sector recorded US$17.5 billion across 65 large deals, accounting for 70% of the overall investments by value. Out of the 47 buyouts, year 2023 has seen a remarkable 13 buyouts, highest ever recorded in this sector.

Initially, growth was primarily driven by pharmaceutical investments: however, healthcare investments have since taken the lead post-pandemic.

In the pharmaceuticals sector, buyout investments dominated, while the healthcare sector primarily saw growth capital investments.

Within the pharmaceutical sector, investments were predominantly directed towards the formulation and Active Pharmaceutical Ingredient (API) manufacturers, accounting for 43% and 42%, respectively.

In the healthcare sector, hospitals received  the largest portion (59%) of all private equity and venture capital investments. Health tech followed, making up 22% of the total investments. As the world’s population continues to age and chronic diseases become more prevalent, there has been a noticeable rise in the demand for medical devices in recent years, accounting for 15% of overall healthcare investments.

The rise in PE/VC investments has been driven by consistent and sustained demand:

Healthcare is a fundamental need, and its demand remains robust regardless of economic downturns. This makes healthcare companies, especially those providing essential services such as hospitals, pharmaceuticals, and medical devices, more attractive to investors seeking stability.The sector is less affected by fluctuations in consumer spending, as the fundamental need for medical treatment and medication cannot be undermined.

The COVID-19 pandemic has acted as a catalyst and changed the way people perceive health and preventive care. This trend has accelerated in recent years, leading to a significant shift in wellness awareness, proactive health monitoring, measures for immunity boosting, and many health-conscious lifestyle changes.

With the aim of improving healthcare infrastructure, the government has launched the PM Ayushman Bharat Health Infrastructure Mission, Pradhan Mantri Jan Arogya Yojana, and other initiatives, creating many opportunities for investors to grow along with the sector.

We expect this momentum will continue and expand in the coming years.

Exits

3Q2024 recorded exits worth US$8.2 billion, 8% lower than the value recorded in 3Q2023 (US$8.9 billion) and 31% higher compared to 2Q2024 (US$6.3 billion). In terms of numbers, 3Q2024 recorded 71 exits, 19% lower than the number of exits in 3Q2023 (88 exits) and 12% lower compared to 2Q2024 (81 exits).

Open market exits were the highest at US$4.2 billion across 32 deals, accounting for 51% of all exits by value in 3Q2024, an 8% increase year-on-year compared to 3Q2023 (US$3.9 billion across 38 deals) and a 13% increase compared to 2Q2024 (US$3.7 billion across 40 deals). Strategic exits followed,  with US$1.8 billion across 17 deals, a 6% decline year-on-year compared to 3Q2023 (US$1.9 billion across 18 deals). Deal value was not available for seven out of 17 strategic deals. Secondary exits ranked third in terms of value, with US$1.4 billion recorded across 12 deals, a 40% decline year-on-year compared to 3Q2023 (US$2.3 billion across 17 deals). Deal value was unavailable for nearly 60% of secondary deals. In 3Q2024, there were  nine private equity-backed IPOs worth US$705 million in exit proceeds, compared to 14 in 3Q2023 (US$798 million) and seven in 2Q2024 (US$481 million).

The two largest exits in 3Q2024 were the acquisitions of Bharat Serums and Vaccines by Mankind Pharma from Advent for US$1.6 billion and GeBBS Healthcare Solutions by EQT from ChrysCapital for US$860 million.

From a sector perspective, the pharmaceuticals sector recorded the highest value of exits in 3Q2024, with US$2.0 billion across four deals, followed by the financial services sector with US$1.6 billion across 14 deals.

Fundraise

Fundraises in 3Q2024 declined by 37% year-on-year, with US$1.7 billion raised across 28 funds compared to US$2.8 billion raised across 24 funds in 3Q2023 and a 55% decline compared to 2Q2024 (US$3.9 billion raised across 24 funds).

The largest fundraise in 3Q2024 was US$500 million, raised by 360 ONE WAM for its secondary fund. This fund will also invest in companies planning to go public within the next two years.

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.