Private equity (PE) and venture capital (VC) investments in India witnessed a significant decline in February 2024, dropping to a mere $2.2 billion. This marks a 39% year-over-year slump compared to $3.7 billion invested in February 2023. The data, compiled by industry body IVCA and consultancy firm EY, paints a concerning picture as it represents the second-lowest monthly total for PE/VC investments since February 2021.
The primary culprit behind this downturn seems to be the absence of large-ticket deals. Traditionally, these big-ticket investments, exceeding $100 million, act as a major driver of overall investment value. In February, however, such deals only amounted to $1 billion, a staggering 82% decrease compared to January 2024 and a 66% drop from the same period last year.
While the total investment value dipped significantly, the number of deals actually rose. February saw 120 transactions completed, reflecting a 111% increase year-over-year and a 40% jump from January 2024.
This suggests that investor activity remains present, but the focus has shifted towards smaller investment rounds.
Experts point towards a cautious investment climate as a possible explanation for the decline in large deals. With several major economies, including India, undergoing elections in 2024, investors might be adopting a wait-and-see approach before committing to bigger ventures.
Despite the slump in February, there are some positive takeaways. The overall deal activity indicates continued investor interest in the Indian market. Additionally, the report highlights a surge in PE-backed IPOs (Initial Public Offerings), suggesting that some companies are looking towards public markets for growth capital.
Looking ahead, the coming months will be crucial in determining the trajectory of PE/VC investments in India. The outcome of upcoming elections and global economic conditions will likely play a significant role in shaping investor sentiment.
