PE investment falls 75% in Q1 to $2.2 billion, fundraising hit too: Refinitiv

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  • Private equity investment in India experienced a sixth consecutive quarter decline in the first quarter of 2023.
  • This is the lowest year-to-date value for PE investment in India since 2018 ($1.7 billion).
  • The internet-specific, computer software and consumer-related sectors received the most investments in the first quarter of 2023.

Private equity investment in India fell as much as 75% year-on-year in the January-March quarter of 2023 to $2.2 billion, according to a report from Refinitiv. In the same quarter last year, PE investments were $8.8 billion.

“This is the lowest year-to-year value for PE investments in India since 2018 ($1.7 billion),” said Elaine Tan, senior analyst at Refinitiv, a provider of financial market data and infrastructure.

Even on a sequential basis, PE investment was down 32%, a sixth consecutive quarterly decline due to macroeconomic headwinds taking its toll, according to The India Private Equity Snapshot for Q1 2023.

With 282 deals, the number of deals during the first quarter of 2023 also shrank by 19.9% ​​from the previous quarter’s 352 deals. On an annual basis, it shrank by 31%.

“Private equity investment in India saw a sixth consecutive quarter decline in the first quarter of 2023 as global macroeconomic and geopolitical headwinds led to caution in investment activity,” said Tan.

Computer software, Internet companies remain a favorite

Computer software and internet-specific companies continue to attract maximum PE interest with $392 million and $870.9 million invested in Q1 2023.

But even the computer software sector saw the sum of invested equity fall by 85% as the number of deals fell from 123 in Q1 2022 to 88 in Q1 2023.

“Internet specific companies and computer software companies continued to attract the bulk of private equity capital in India. However, the share of invested equity fell to 58% in the first quarter of 2023 from 75% in the same period last year, mainly due to fewer deals in the market,” says Tan.

The sum of equity invested in internet-specific (-78.3% yoy), consumer related (-83.9% yoy) and transportation (-72.3% yoy) declined in the first quarter of 2023 compared to the same quarter of the previous year.

However, the energy and industrial sector (361% year-on-year) and the medical and health sector (310.5% year-on-year) saw an increase in the sum of invested equity.

“India’s robust startup ecosystem makes it an increasingly attractive destination for investment and companies looking to access Asia-Pacific markets outside of China,” says Tan.

Due to volatile market conditions and uncertainty, private equity fundraising activity in India fell 41% in the first quarter of this year compared to the same quarter in 2022. It also experienced a 45% sequential decline.