India-focused PE, VC funds raised USD 8.5B; healthcare sector hugely benefitted

As per a report by Preqin, a platform curating insight on alternative assets, seventy India-focused private equity and VC funds raised an aggregate $8.5 billion, which is the highest ever annual fundraising value.

Rajat Tandon, President of IVCA said, “Amidst global economic challenges, India’s private equity and VC sector has demonstrated remarkable resilience, positioning itself as the third largest destination for private investment in terms of deals value. Furthermore, looking at data of nine years, India’s exit market has undergone significant deepening and diversification over the years, with aggregate exit value nearly quadrupling and more LPs discovering more accessible pathways.”

The report noted that defensive sectors such as healthcare and energy and utilities have shown growth in India, diverting investment attention away from traditionally popular sectors like IT.

Tandon noted that this growth was fueled by the opportunities in the Indian ecosystem. He explained, “This transformative phase in the Indian investment landscape is characterized by changing sectoral preferences and a growing focus on quality assets, marked by a surge in fundraising, larger funds, and more efficient capital deployment. These developments foreshadow a promising future for our ecosystem, nurturing the growth of enduring businesses.”

The report also highlighted how private equity and VC deals in IT experienced a sharp decline, plummeting from an aggregate value of $26.3 billion in 2021 to $8.3 billion in 2022. This slowdown has continued this year, with IT deal value shrinking to $1.7 billion in the first seven months of 2023.

Harsha Narayan, Managing Editor, and lead author of the report added, “As private equity and VC players in India navigate these uncertain times, there has been a fundamental shift in their investment approach. These investors are increasingly focusing on fewer, higher-quality assets and driving value creation within their portfolios.”

Moreover, as per the report, private equity and VC players in India are increasingly focusing on fewer, higher-quality assets and driving value creation within their portfolios.

Furthermore, the annual number of funds closing has more than tripled over the last decade, according to the Preqin report. GPs in India are also raising and closing larger funds, with the average fund size almost doubling from $72.3 million in 2013 to $121.4 million in 2022, they added. Business Today