PE inflows plunge 61% to $6.1 billion in Jan-Jun; lowest since 2020

Continuing global macroeconomic uncertainties and geopolitical headwinds, along with tight credit markets, pulled down private equity investments into the country by 61 per cent in the first half of 2023 to USD 6.1 billion, according to a report.

The value is the lowest in the January-June period since 2020, shows data collated by Refinitiv, a London Stock Exchange Group subsidiary and one of the world's largest financial markets data and insights providers.

Despite the funding winter in the space, startups continued to attract the largest share of private equity capital, which in absolute terms was a steep 69 per cent decline year-on-year.

However, in volume terms, PE deals jumped 53 per cent on a sequential basis to 300 transactions and rose 0.8 per cent in value terms on a quarter-on-quarter basis to USD 2.6 billion.

Given the record amount of USD 13.7 billion raised by India-based PE funds in 2022, there is substantial capital waiting to be deployed.

Internet-specific companies, including computer software and utilities, continued to attract maximum PE investment with USD 2.04 billion in the reporting period.

While in value terms the inflows into the online space fell 68.8 per cent, the number of deals declined to 188 from 262 a year ago. As a result, computer software segment saw a massive 80.8 per cent year-on-year drop, followed by transportation, which received 48.3 per cent less capital.

On the other hand, financial services saw a much higher fall at 83.2 per cent, while consumer-related companies saw the funding tap drying up by 80.7 per cent. However, the industrial/energy sector saw inflows jumping 354 per cent.

Meanwhile, domestic funds saw money inflow dipping by 2.7 per cent to USD 2.63 billion. This brings PE fundraising activity during the first half to USD 5.3 billion, down 26.8 per cent year-on-year.

Top 10 PE investments in the first half were Utility player Avaada Ventures (USD 1 billion), Lenskart Solutions (USD 600 million), Ola Electric Mobility (USD 300 million), Serentica Renewables (USD 250 million), Girnar Insurance Brokers and Sona Precision Forgings (USD 149.6 million each), Biocon (USD 129.2 million), Mintifi (USD 110 million), Freshtohome Foods (USD 104 million), Finnovation Tech Solutions, PhonePe and Zetwerk Manufacturing Businesses (USD 100 million each).