India earns 20% of PE-VC funds in APAC in ‘22

India received investments worth US$ 61.6 billion last year, marking the third time it crossed the US$ 60 billion mark

April 20, 2023

There were more than 2,000 deals in 2022, continuing the strong flow from previous years

Investments in banking, financial services and insurance (BFSI), healthcare, energy, and manufacturing grew by 50% to US$ 28 billion

Investments in clean energy and Electric Vehicles (EVs) amounted to US$ 8 billion

Traditional sectors dominated exits, with the share of exits greater than US$ 100 million expanding to 75%

India received 20% of the total private equity and venture capital (PE-VC) investments in the Asia Pacific region last year, according to a report co-authored by consulting firm Bain & Company and the Indian Venture and Alternate Capital Association (IVCA). This makes India a standout performer in a region where capital flows have been slowing down, and a positive indicator of the country’s economic growth.

According to the report, India received investments worth US$ 61.6 billion last year, marking the third time it crossed the US$ 60 billion mark. However, this figure represents a slight decrease from the US$ 69.8 billion recorded in 2021.

Investment Overview

There were more than 2,000 deals in 2022, continuing the strong flow from previous years, said the report. Investments in BFSI, healthcare, energy, and manufacturing grew by 50% to US$ 28 billion, enabled by strong domestic consumer sentiment. Investments in clean energy and Electric Vehicles (EVs) amounted to US$ 8 billion, marking the preference for Environmental, social, and governance (ESG). Investments in ESG assets more than doubled, from around 5% in recent years to 13% of India’s total PE-VC investments in 2022, with nearly US$ 7.9 billion in deal value. Consumer technology and IT/ITeS segments saw a decline in investments.   However, Healthcare investors made marquee exits throughout the year.

Experts said that the Indian market’s long-term prospects remain optimistic, despite the global economic slowdown in the near term, and the economy’s strong fundamentals make it an attractive destination for private equity investment. 

The second half of 2022 witnessed a slowdown in private equity and venture capital (PE-VC) investments, as market sentiment turned conservative amid geopolitical tensions and macroeconomic challenges. In fact, deals over US$ 1 billion declined. 

Funding Trends

In 2022, VCs played a significant role in deal volume. PE deal value remained relatively stable, despite lower volumes. However, the consumer technology and information technology (IT) sectors, which contributed to around 60% of deal value in 2021, contracted to nearly 30% in 2022. 

According to the report, India’s BFSI and fintech sectors experienced a revival of interest, with investments of almost US$ 10 billion in 2022, comprising 18% of the country’s PE-VC investments. The report highlights that lending is a significant theme driving investments across NBFCs and fintech firms.

Post-pandemic, India’s healthcare sector has become an attractive investment option for investors. With deals worth US$ 4.3 billion in 2022, representing about 8% of total PE-VC investments, the sector dominated exits, commanding 16% of total exit value. KKR’s public markets exit from Max Healthcare worth US$ 1.6 billion, Everstone’s exit from Sahyadri Hospitals, and the IPOs of Medanta and Rainbow Hospitals were among the notable exits in the space.

Exits

On the other hand, exits decreased to US$ 24 billion from an all-time high of US$ 36 billion in 2021. Traditional sectors dominated exits, with the share of exits greater than US$ 100 million expanding to 75% in 2022 from the previous year.

Sources: Business Standard | Economic Times

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