Stiff competition in PE/VC fund landscape as more players join in

The competitive landscape for private equity (PE) and venture capital (VC) funds is getting more intense, with the number of players going up to grab a piece of the pie. 

According to “India Private Equity Report 2025”, released by Bain & Co and Indian Private Equity and Venture Capital Association (IVCA) on Tuesday, the number of PEs involved in deals in India has gone up by over 60-65 per cent between 2016, when there were between 100 and 110 funds, to as many as 170-180 funds in 2024. It represents a CAGR (compound annual growth rate) of 6-7 per cent in the last eight years.

  India continues to attract strong investment from global investors. As much as 90 per cent of the top 30 global funds, based on assets under management (AUM), have an active presence in India and their number is already growing.

  In 2024, global funds accounted for 50-55 per cent of the total number of funds, from 40-50 per cent in 2016. At the same time domestic funds are also flexing their muscles — they account now for 40-45 per cent of total PE funds. The rest are with government-linked funds.

  Not only that fundraising is increasingly becoming more competitive, with limited partners (LPs) prioritising past fund performance as one of the key drivers of new investment. A survey done for the report shows that 56 per cent of the funds surveyed in India said that LPs now demand a stronger track record, making past performance a critical  factor in getting follow-on funding. 

  Despite that, by the close of 2024, India-focused funds accounted for 10 per cent of all the funds raised in that year in the Asia Pacific region, up from 7 per cent in 2016. However, in the same period, pan-Asia funds, which have a substantial allocation for India, have gone up from 36 per cent to 57 per cent.

  The other clear trend is that PE investors are increasingly gravitating towards buyouts. As a result, the share of buyouts in overall PE deal-making has gone up sharply from 37 per cent in 2022 to 51 per cent in 2024. This trend reflects a strategic focus on acquiring controlling stakes in high-quality assets across sectors, driven by accumulating dry powder.

  To look at the trend from another perspective, small buyouts ($250 million and below) continued to gain share, making up to 68 per cent of all buyouts in 2024 compared to only 55 per cent in 2023, and 40 per cent in 2022. Buyouts in the $500 million-1 billion category have also risen from 9 per cent in 2023 to 14 per cent in 2024 across all such deals.

  As far as 2025 is concerned, the report says that ageing assets held by PE and VC funds for a longer period of time are expected to accelerate buyout deals.

  Data shows that buyout deals of over $100 million in which PEs exited within five years have shown a marked decline — they went down from 46 per cent for deals done in FY16 to only 37 per cent for deals signed up in FY19. 

The percentage of deals in which PEs realised their entire returns went down declined from 38 per cent to more than half at 17 per cent in the same period. In simple terms, it means that in 2025, nearly 83 per cent of deals that are over five years old could come up for exits, partial or complete, giving a big push to exits.