PE/VC bets drop for second year, down 11% at $49.8 bn in 2023: Report

Investments by private equity and venture capital funds declined for the second consecutive year in 2023 after the "funding winter" impacted 2022, a report said on Wednesday.

The dedicated funds poured in $49.8 billion across 853 deals in 2023, as against $56.1 billion in 2022 across 1,273 deals, the report by industry lobby IVCA and consultancy firm EY said.

The overall activity declined 34 per cent in 2022, after the all-time high of $75.9 billion reached in 2021.

The decline in deals was largely because of a lack of interest in investing in India's startups, the report said, specifying that 2023 saw only 472 deals as against 815 in the year-ago period.

The funds have "significant amounts of dry powder" and global funds are also looking to increase India's capital allocation, the consultancy's partner Vivek Soni said, adding that he remains "optimistic" about the Indian PE/VC scene for the new year.

In 2023, growth investments was the largest segment for PE/VC bets with $17.1 billion invested across 147 deals, which is a 4 per cent increase by value, but a 21 per cent decline by volume.

Buyout transactions came in second with 56 deals worth $12 billion in 2023, a 14 per cent growth over the $10.4 billion across 53 deals in 2022, the report said, adding that the growth was mostly due to three $1 billion-plus deals.

Temasek's $2 billion investment in Manipal Health and $2 billion investment in Digital Edge DC, a 300 MW hyperscale facility in Navi Mumbai by NIIF, AGP DC InvestCo and Digital Edge (Singapore) Holdings were the largest deals.

Pureplay PE/VC investments declined 25 per cent to $30.2 billion in 2023, it said, adding that this was offset by higher quantum of bets in infra and realty sectors.

Exits by funds jumped 36 per cent to $24.8 billion but were still lower than the $39.6 billion in 2021.

There was an 8 per cent decline in fundraise by the PE/VC sector at $15.9 billion, which will be put up for investments in the future.