Private equity (PE) and venture capital (VC) investments in October 2024 increased by 4 per cent to $4.7 billion from $4.5 billion in October 2023 and 40 per cent higher than $3.4 billion in September 2024, said IVCA-EY monthly PE/VC roundup. In terms of deal volume, October 2024 saw a 21 per cent increase with 91 deals compared to 75 in October 2023. However, startup investments during the month stood at $880 million across 56 deals, reflecting a 50 per cent decline compared to $1.8 billion across 42 deals in October last year.
October 2024 recorded nine large PE-VC deals (deals with a value greater than $100 million), aggregating $3.3 billion, a 4 per cent decline in value from October 2023 ($3.4 billion across 11 deals) and 69 per cent higher than September 2023 ($2 billion across eight deals). The largest deal of the month involved Temasek acquiring an 18 per cent stake in VFS Global Services from Blackstone for $950 million.
Other big-ticket deals during the month were Temasek’s $200 million investment in Rebel Foods and Eruditus Learning Solutions’ $150 million funding from TPG, SoftBank, Accel, CPPIB and others.
Speaking on the investment activity during the month, Vivek Soni, Partner and National Leader, Private Equity Services, EY said that while the startup world is experiencing rapid growth, established and mature companies are experiencing a surge in interest due to their balanced risk-return profiles.
“These companies promise substantial returns in a shorter period and offer greater predictability compared to investments in early-stage companies. This makes them an attractive target for PE and VC investors looking to generate value from growth investing,” he said.
The last quarter of the year witnessed a strong start, with October PE/VC investments growing by 40 per cent compared to September. However, rising inflation, rupee depreciation and the significant dip in Q3 2024 corporate earnings and ensuing earning downgrades are making investors adopt a cautious approach, Soni added.
Although the Indian equity markets have seen some correction, challenges around bid-ask spreads in private transactions remain, he said.
“While we remain cautiously optimistic in the medium term, for the next 2-3 months, we project tepid PE/VC investment activity. On the exits front, PE-backed IPOs and open market exits are expected to reduce significantly if volatility in midcap-small cap space continues.”
PE/VC exits in October stood at $1.1 billion across nine deals, 40 per cent lower than $1.9 billion in October 2023. Secondary exits in October 2024 accounted for 96 per cent of all exits by value ($1.1 billion).