Private equity investments in India in the first half of CY23 stood at $6.1 billion, a drop of 61% compared with the same period last year amid geopolitical headwinds along with tight credit markets and macroeconomic uncertainty. According to Refinitiv data, private equity (PE)investments in the second quarter of CY23 stood at $3.53 billion, 49% lower than Q2 of last year ($7 billion).
In the first half of CY22, the PE investments stood at $15.8 billion.
Internet-specific companies continue to attract maximum PE interest with $2.04 billion invested in the first half of this year. The sum of equity invested in the sector, however, has decreased by 68.8%, with the number of deals declining to 188 from 262 during the same period last year.
Computer software (-80.8% yoy), transportation (-48.3% yoy), financial services (-83.2% yoy)as well as consumer related (-80.7% yoy) sectors witnessed a decline in the sum invested in the first half. However, industrials/energy (354.1% yoy) and industries catering to utilities saw a significant increase in sum of equity invested.
Fundraising activity for funds located in India has seen a 2.7% decline to $2.63 billion in Q2 of this year from $2.7 billion last year and increased a nominal 0.8% from Q1 2023. This brings PE fundraising activity in India during the first half of 2023 to $5.24 billion, down 26.8% year-on-year.
“Given the record amount raised by India-based PE funds in 2022, there is substantial capital waiting to be deployed in alternative growth and strong start-up markets like India and Southeast Asia,” Tan added.
PE investments in real estate stood at $1.9 billion, a 5% drop year on year, according to a separate report Anarock Capital Flux. Just like last year, foreign investors accounted for most of the activity in Q2.
Average ticket size went up sharply in Q2 of CY23, driven by a single large transaction in which a sovereign wealth fund partnered with a REIT to buy out commercial assets. Share of this top PE deal is 74% of the total PE deals in the quarter.
Shobhit Agarwal, MD & CEO of Anarock Capital, said “Excluding this deal, private equity activity remained subdued owing to a high interest rate environment and global uncertainties. PE transactions in Indian real estate are, in any case, tilted towards equity investments in office assets by foreign investors. The single large deal between the consortium of GIC and Brookfield REIT with Brookfield AMC has further skewed the mix during the quarter.”