PE-VC investment in India drops by 15% in Q3 2023
The investment amount also dipped 49% compared to the immediate previous quarter which saw $11.7 bn being invested across 202 deals
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Private Equity-Venture Capital (PE-VC) funds invested $6 billion (across 139 deals) in India-based companies during the quarter ended September 2023 (Q3 2023), shows data from Venture Intelligence, a research service focused on private company financials, transactions, and their valuations. This represents a 15 per cent decline compared to the same period in 2022 (which saw $7 billion being invested across 327 deals). The investment amount also dipped 49 per cent compared to the immediate previous quarter (which saw $11.7 billion being invested across 202 deals), says a report by Venture Intelligence.
The PE-VC investment figures for the first 9 months of 2023 - at $23.6 billion (across 542 deals) came in 38 per cent lower compared to the same period in 2022 (which saw $38.1 billion being invested across 1,141 deals).
Q3 2023 witnessed 16 mega deals ($100 million+ rounds) worth $4.5 billion, compared to 13 such investments (worth $3.8 billion) in Q3 2022 and 22 such deals (worth $9.7 billion) in the immediate previous quarter.
A few more confidence building transactions will help catalyse the 'trickle down' effect into private markets and earlier stage companies.
Talking to Bizz Buzz, Arun Natarajan, Founder, Venture Intelligence, said, “While there is clearly no returning to the lofty heights of 2021 any time soon, recent weeks have seen global investors like KKR and India-focused firms like Westbridge Capital, MEMG Family Office, IIFL AMC and India Resurgence Fund stepping up their investment activity, With continued strength in the public markets (including IPOs) and the large amounts of ‘dry powder’ available with India-dedicated funds, a few more ‘confidence building’ transactions will help catalyse the 'trickle down' effect into private markets and earlier stage companies."
The comparative figures in the quarters going forward, both owing to the lower base effect and improving investor sentiment, can be expected to compare more favourably, he added.
The $1 billion investment by Qatar Investment Authority in Reliance Retail Ventures accounted for 17 per cent of the overall PE-VC investment pie in Q3 2023. The buyout of fertility clinic chain Indira IVF by Baring Asia for $700 million and The Carlyle Group's $500 million investment in engineering services BPO firm Quest Global were the other top PE-VC deals of Q3 2023.
These were followed by two investments by global PE investor KKR: a $275 million investment in logistics tech startup Leap India and a $250 million investment in Reliance Retail Ventures.
Re-entry of Unicorns
Q3 2023 recorded the minting of one new Unicorn - in the form of quick commerce startup Zepto - ending the drought of the previous 11 months in the creation of private companies valued at $1 billion and above. Overall, Unicorn startups in India attracted close to $400 million in Q3 2023, - down by 16 per cent compared to the same period last year (which saw $500 million being invested in Unicorn startups) and down by 44 per cent when compared to previous quarter (which saw $700 million being invested in unicorn startups).
IT & ITeS companies accounted for $1.8 billion of the total investment pie in Q3 2023, lower by 12 per cent when compared with Q3 2022 (which saw $2 billion being invested). Tech industry investments were led by the $500 million investment in Quest Global by Carlyle and the $229 million raised by B2B SaaS fintech startup Perfios Software (from Kedaara Capital and existing investor Bessemer). These were followed by quick commerce firm Zepto's $200 million fund raise (led by StepStone Group).
The healthcare industry attracted about $1.3 billion in Q3 2023 led by the $732 million acquisition of a majority stake in Indira IVF by Baring Asia, followed by India Resurgence Fund's acquisition of IndSwift Laboratories active pharmaceutical ingredients (API) and contract research and manufacturing services (CRAMS) businesses for $200 million
The two mega investments in Reliance Retail Ventures - totalling $1.25 billion from KKR and Qatar Investment Authority - propelled the retail industry to the third slot in Q3 2023.
