Private equity (PE) investments in India experienced a notable resurgence in Q1 2024 after experiencing a slowdown over the past few quarters. According to the latest report by Mazars India, a total of 310 PE deals worth $5.2 billion were recorded during the March quarter, an increase of an impressive 26.5% YoY in volume and 61.8% YoY in value, respectively.
What’s noteworthy is that Q1 2024 stands out as the most active quarter in terms of PE deal volume since Q4 2022. However, the deal value is still not on par with levels seen before Q3 2022, when the investment figures were in double digits. To put this in perspective, the deal value plummeted dramatically in Q3 2022 to $4.6 billion from $13.4 billion in Q2 2022 and $23.3 billion in Q3 2021. This decline highlights the significant drop in investors’ confidence in Indian startups during the period between H2 2022 and Q4 2023.
One of the most significant deals in Q1 2024 was the $1 billion investment in SAEL, a renewable and green energy company. This deal was notable not only for its size but also for its focus on sustainable and green energy, reflecting a broader trend towards environmental responsibility in investment decisions. However, despite the overall increase in PE activity in India, this was the only deal in the quarter with a transaction value of $1 billion, indicating that the market is still recovering and large-scale investments are still somewhat selective.
Angel/Seed Investments in India Q1 2024
In Q1 2024, the angel/seed investments in India continued to dominate the PE deal landscape, accounting for a whopping 52.6% share of the total deals and an overwhelming 99.1% share of the total invested amount.
Following a subdued performance in 2023, angel and seed investment activity in India saw a resurgence during the first quarter of 2024. The volume of these early-stage investments grew 17.3% YoY to 163 deals, while the value increased 29% YoY to $307.3 million in Q1 2024. This impressive growth indicates strong investor confidence in nurturing nascent ventures.
Among the standout investments in this category, Avail Technologies, a pioneering provider of total transit solutions, secured the largest angel/seed investment of Q1 2024, amounting to $27 million. This highlights the potential investors see in innovative solutions that address urban mobility challenges.
Venture Capital Investments in India Q1 2024
In Q1 2024, venture capital (VC) emerged as the second most active category in the PE deal landscape in India, representing a 26.7% share of the overall deal value and a 30.3% share of the total number of transactions. The country witnessed an impressive 94 deals, marking an appreciable 14.6% YoY increase during the March quarter.
However, total VC investment in Indian companies dropped by a notable 27.6% YoY to $1.4 billion in Q1 2024. This decline is attributed to the cautious approach towards high-growth businesses that have yet to establish solid economic models.
Some notable VC investments in Indian companies stood out during Q1 2024, including a substantial $300 million in Meesho, $103 million in Pocket FM, an audio series platform, and $80 million in Perfios Software Solutions, one of India’s largest SaaS-based B2B fintech software companies. These investments underscored the persistent interest and confidence of venture capitalists in India’s burgeoning tech and innovation ecosystem, despite the challenges posed by economic uncertainties.
In a Nutshell
In Q1 2024, India experienced a significant sectoral shift and diversification in investment patterns. Traditional sectors such as infrastructure, telecom, media and entertainment, healthcare, energy, consumer retail, manufacturing, and banking, financial services, and insurance (BFSI) witnessed increased funding during this period. This marked a notable departure from the previous dominance of IT, software as a service (SaaS), and consumer technology sectors.
The notable shift in funding in Indian companies reflects a broader investment strategy aimed at tapping into diverse sectors with growth potential. Additionally, it suggests a move towards a more balanced portfolio approach by investors, seeking to mitigate risks associated with overreliance on specific sectors.
Overall, the first quarter of 2024 has set a positive tone for PE investments in India. The growth in deal volume and value, along with the diversification across sectors, suggests a robust and resilient investment environment. As the market continues to recover, stakeholders and other investors are optimistic about companies’ growth and evolving opportunities in the Indian PE landscape.
