PE/VC investments decline 22% in March to $4.6 billion, says report

Investments by private equity and venture capital funds (PE/VC) declined by 22 per cent in March to USD 4.6 billion spread across 107 deals, a report said on Wednesday.

The deal activity showed an increase of 54 per cent by value at USD 15.5 billion across 360 deals, largely on the back of heightened activity in the startup space, the monthly report by IVCA and EY said.

"While India's position as an attractive destination for PE/VC investments is expected to remain strong in 2022 given its high growth and macroeconomic and policy stability, the continuing geopolitical tensions, rising inflation, quantitative tightening by the US FED and inversion in the US yield curve are potential downside risks, making investors circumspect," Partner at EY Vivek Soni said.

Exit activity showed a 16 per cent decline at USD 4 billion for the quarter, making it the lowest in the last five quarters in the absence of large strategic and secondary deals.

"A drought in PE-backed IPOs has further dampened the value of PE/VC exits. Nonetheless, the past three months have recorded a rising trend in the number of exits despite the absence of PE-backed IPOs," Soni added.

On the investment front, there were 45 large deals aggregating to USD 10.1 billion in the quarter ended March, compared to 30 large deals aggregating to USD 6.7 billion in the year-ago period, and 53 large deals worth USD 19.5 billion in the preceding December quarter, the report said.

If one were to exclude investments in real estate and infrastructure sectors, the total bets were recorded at USD 13.9 billion in the March quarter, which is 77 per cent higher than the USD 7.8 billion recorded in the year-ago period, and 36 per cent lower than the value recorded in the December quarter at USD 21.6 billion, it added.

The report further said that the start-up investments were the highest in the March quarter with USD 7.7 billion invested across 255 deals as compared to USD 2.8 billion across 175 deals in the year-ago period and USD 9.6 billion across 233 deals in the preceding December quarter.

From a sectoral perspective, five sectors recorded more than USD 1 billion in investments in the quarter, among which, financial services received the highest value of investments at USD 3.2 billion across 71 deals, followed by the e-commerce sector which recorded USD 2.7 billion across 47 deals, and the technology sector with USD 2.6 billion invested across 59 deals.

The March quarter saw USD 4.6 billion in fundraising compared to USD 1.7 billion in the year-ago period and USD 1.6 billion in the preceding December quarter, the report noted.