PE, VC investments to see better growth

On the new investments front, the lower base effect is likely to lead to better comparisons in 2024 - Arun Natarajan, Founder, Venture Intelligence, tells Bizz Buzz

Deal Pipeline

• Strong rally in 2023 enabled PE-VC investors to exit profitably
• 2023 saw just 2 Unicorns when compared to 21 in 2022
• Investments peaked to $65.48 billionin 2021

Mumbai: Lower base effect in private equity (PE) and venture capital (VC) investments may lead to better growth in 2024.The strong public market sentiment towards the year end has enabled PE-VC investors to exit their investments profitably, including via IPOs like that of D2C brand Mamaearth.

Talking to Bizz Buzz, Arun Natarajan, founder, Venture Intelligence, says: “On the new investments front, the lower base effect is likely to lead to better comparisons in 2024.”

The New Year will also reveal how the investor ecosystem responds to the challenges posed by the corporate governance issues and inflated valuations at some of the growth and late- stage tech companies that raised mega investments in 2021-22, but are yet to achieve profitability, he said.

The PE-VC investments in the country dropped by 38 per cent to less than nearly $30 billion in 2023 from $47.6 billion in 2022, according to a study by the research firm Venture Intelligence.As much as $29.7 billion was invested across 756 deals in Indian companies in 2023, compared to 1,362 deals in the previous year excluding PE investments in real estate.

The 2023 PE-VC deal value and volume were the lowest in five years. Between 2019 and 2023, investments peaked at $65.48 billion across 1,456 deals in 2021 from $36.41 billion invested in 1,085 deals in 2019, the study said

The year 2023 witnessed 67 mega deals (over $100 million rounds) worth $21.2 Billion, compared to 112 such investments worth $31.8 billion in 2022. The $2.4-billion investment in Manipal Hospitals by Temasek (which gained majority control) and TPG Capital was the largest PE-VC investment in 2023. This was followed by the $1.35-billion buyout of education loans focused HDFC Credila by Baring Asia and ChrysCapital and the $1-billion investment by Qatar Investment Authority (QIA) in Reliance Retail.

The year 2023 saw just two Unicorn companies (VC-funded startups valued at $1 billion or more) being created, compared to 21 in 2022 (and a record 44 in 2021). Quick commerce startup Zepto, which attracted $ 231 million led by foreign investors in August 2023, was joined on the Unicorn list towards the year end by consumer & small business loans firm Incred Finance, which had attracted $60 million from domestic family offices and HNIs.