Private equity likely to grow in India as IPOs wane, say industry leaders

Indian private equity and venture capital firms are hoping the ongoing slump in markets this year will force businesses to tap private funding unlike 2024 when a red-hot IPO market saw many investors unload stakes, industry executives said on Tuesday.

The PE sector is expecting a higher number of deals this year, especially in financial services, IT and healthcare sectors, industry executives said at an Indian Venture and Alternate Capital Association event in Mumbai.

According to an EY-IVCA report released on Tuesday, PE and VC investments stood at $56 billion in 2024 compared to a record $76.7 billion in 2021. Data also showed PE investors sold off stakes worth $26.7 billion in 2024 - a 7 per cent increase in a year that saw the second-highest number of PE-backed IPOs ever in a year.

 

"The second half of 2025 will be a buyer's market much more than a seller's market," said Manish Kejriwal, founder of Kedaara Capital, noting that his firm did two to three deals last year compared to five to six normally.

The buoyant Indian stock market for most of last year provided the perfect opportunity for many firms to ride the wave.

The valuations in the IPO market were double what the PE market offered, estimated Mukesh Mehta, senior managing director at Blackstone.

However, the stock market slump since October - the worst in 23 years - has dried up IPOs. That could mean a reversal in the trend in private equity markets, Kedaara Capital's Kejriwal said.

Sumeet Narang, founder of Samara Capital, said the focus in the next 12-18 months would be to invest or buy more rather than focus on exits.

"There is a pool of business and shareholders looking for liquidity. Hence, deal flow should accelerate in the next 12-18 months if the public markets stay as they are now."

That will also get a lift from less competition from the IPO market, said Blackstone's Mehta.

"I know some of the IPOs have been pulled back due to (the stock market's) volatility and valuation (mismatch). It won't be as easy to do an IPO as it was earlier," Mehta added. ($1 = 86.7150 Indian rupees)