India's Private Equity Deals Almost Halve in 2024: Here is why

Global private equity (PE) investment in India almost halved in 2024, even as the rest of the world saw an uptick. The country recorded 41 private equity deals amounting to $1.70 billion in 2024, as per the data analysed by S&P Global Market Intelligence.

This is about 45% lower than what India saw in 2023, when just 33 private equity mergers and acquisitions were worth $3.10 billion, as per the global credit rating agency's data.

"India has seen increasing interest due to strong deal flow and an active exit environment, especially in sectors with strong macro tailwinds such as consumer, healthcare, and IT services," said Sean Yoo, Head of Asia-Pacific Investments at Hermes GPE LLP.

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IPO Exit Strategy

This decline also came on the back of a thriving IPO and public markets, which made it favorable for private equity firms to pull out their capital. According to an EY report, India topped global IPO volumes for the first time in 2024, with 337 issues (SME and mainboard), surpassing the US (183 issues). India also emerged as the second-largest market, raising $70 billion in equity last year.

As start-ups and small businesses flocked to public listings, for investors of these firms, IPOs became an exit strategy. According to S&P Global Market Intelligence, exits of private equity firms from India totaled $5.51 billion, a whopping 156% increase compared to the prior year.

Yoo also told S&P that high interest rates in the US have pushed global investors to put more capital there.

"Asian currencies, as a result, weakened over the past several years," he said.

However, the healthcare sector bore the brunt of this decline, with private equity and venture capitalist investments in the sector dropping 14% in the first 11 months of 2024, as per Venture Intelligence.

Uptick in Funding Rounds

Despite slower deal-making, India witnessed a slightly higher number of funding rounds, with total funding reaching $13.70 billion compared to 2023's $11.40 billion. Furthermore, the median size of the funding rounds also rose to $3.6 billion from $2.6 billion, S&P Market Intelligence data shows.

Some of the most notable PE transactions included the Rs. 18,642 crore acquisition of American Tower's operations in India by Brookfield-backed Data Infrastructure Trust and Zepto parent firm Kiranakart Technologies Pvt Ltd securing Rs. 11,684 crore through four deals.