PE surges

Chandigarh, India –21st May 2024: In Q1 2024, India’s Private Equity (PE) landscape surged, as highlighted in Mazars in India’s latest PE Deal Tracker Report. With 310 transactions totaling around US$5.2bn, this period marked a significant resurgence from previous quarters. Notably, it’s the most active quarter since Q4 2022 in terms of deal volume, with a remarkable 61.8% growth in deal value compared to Q1 2023, which stood at US$3.2bn. Transaction numbers rose by 26.5%, from 245 deals in Q1 2023 to 310 deals in Q1 2024, showcasing renewed vigor in India’s PE arena. Additionally, Q1 2024 saw a notable surge in PE exit activity, marking the highest number of exits since Q3 2021.

Akhil Puri, Partner, Financial Advisory, Mazars in India, stated, “A quarter marked by the resurgence of mega deals and sectoral diversification, Q1 2024 showcased a vibrant PE landscape where traditional sectors like infrastructure, telecom, healthcare, and energy gained significant funding. The $2 bn ATC acquisition and notable ESG investments underscored a dynamic investment environment. PE exits surged with 50 deals valued at US$3.6bn, highlighting robust market conditions. While VC funding saw a decline, the future looks promising with India’s resilient fundamentals and policy support fostering a conducive environment for startup growth and global competitiveness.”

PE activity by stage of investment:

Angel/Seed investment trend:

In Q1 2024, Angel/Seed investment remained the biggest category within the PE deal landscape, accounting for 52.6% (down from 56.7% in Q1 2023) of the overall number of deals. After a muted 2023, the Angel/Seed category witnessed a significant upward movement in both value and volume during the first quarter of 2024. The deal value within the category surged by 29.0% to US$307.3m during Q1 2024, compared to US$238.2m in Q1 2023. The number of transactions in the quarter expanded by 17.3% to 163 deals, compared to 139 deals in Q1 2023.

Venture capital investment trend:

During Q1 2024, the venture capital category is the second most active category in the private equity deal scape in terms of both number of transactions and deal value, representing a 26.7% share of the overall deal value and a 30.3% share of the total number of transactions. In terms of growth, the category witnessed a significant uptick in volume, recording 94 deals in Q1 2024, marking a 14.6% increase over Q1 2023. In contrast, the overall deal value for the category shrunk by 27.6% and reached US$1.4bn, compared to US$1.9bn in Q1 2023.

Private equity investment trend:

During the quarter, private equity investments category grabbed lion’s share of the overall PE deal value and accounted for a 43.2% share, up nearly 20.0% from 24.0% share in Q1 2023. In terms of growth, the deal value for the category increased nearly two-fold (191.8%) to US$2.3bn in Q1 2024, compared to US$772.0m in Q1 2023. The number of transactions for the category was up by only 1 deal in the quarter, marking 17 deals, compared to 16 deals during the same period in the previous year.

PE exits in India – Q1 2024 highlights:

Much like PE investments, the PE Exit activity during Q1 2024 witnessed a significant surge, marking the highest number of exits since Q3 2021. During the period, a total of 50 exits were inked, up from just 11 exits in Q1 2023, registering a whopping 354.5% growth. This massive increase in volume fueled a nearly five-fold increase in value, with the overall exit value in Q1 2024 reaching US$3.6bn, compared to US$651.1m in Q1 2023.

PE exit trends by exit route – Q1 2024 insights:

In terms of growth in exit value, open market exits witnessed a massive rally in deal activity during Q1 2024. As compared to Q1 2023, the open market exits value grew multi-fold and reached US$2.9bn during the quarter, up from US$121.1m in Q1 2023. Meanwhile, the secondary sales exit route saw a significant reduction, contracting by a massive 93.5%.

The PE landscape in Q1 2024 reflects a resilient and evolving market in India. The resurgence of mega deals, sectoral diversification, and a robust exit environment indicate a positive trajectory for the PE industry. With continued policy support and a conducive investment climate, India remains an attractive destination for PE investments, fostering innovation, growth, and economic development.