PE, VC investments rise 4% to $4.7 billion in Oct

Private equity and venture capital investments rose 4% year-on-year to $4.7 billion in October 2024 compared with $4.5 billion in the same month last year, according to a report by EY and Indian Venture and Alternate Capital Association (IVCA).

In terms of deal volume, October 2024 saw a 21% increase with 91 deals compared to 75 in October 2023. October 2024 recorded nine large deals (deals with value greater than $100 million), aggregating $3.3 billion, a 4% decline in value from October 2023 ($3.4 billion across 11 deals). The largest deal of the month involved Temasek acquiring 18% stake in VFS Global Services from Blackstone for $950 million.

Credit investments led the way in October 2024, with $1.8 billion invested across nine deals — a staggering increase from $169 million across five deals in October 2023, marking nearly tenfold growth in investment. Growth investments were the second largest, with $1.6 billion invested across 14 deals in October 2024, a growth of 32% compared to $1.2 billion across 17 deals in October 2023. Start-up investments were the third largest at $880 million across 56 deals, reflecting 50% decline compared to October 2023 ($1.8 billion across 42 deals). Buyout investments recorded $228 million across four deals, an 80% decline from October 2023 ($1.2 billion across four deals).

From a sector point of view, infrastructure was the top sector in October 2024, attracting $1.8 billion in PE/VC investments across nine deals, followed by technology ($1.1 billion) and financial services ($470 million). These sectors, combined, accounted for 72% of total PE/VC investments in October 2024.

PE/VC exits were at $1.1 billion across nine deals in October 2024, 40% lower than in October 2023 ($1.9 billion), the report says. Secondary exits in October 2024 accounted for 96% of all exits by value ($1.1 billion).

“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,” says Vivek Soni, partner and national leader, Private Equity Services, EY.

“The last quarter of the year witnessed a strong start, with October PE/VC investments growing by 40% compared to September. However, rising inflation, rupee depreciation and the significant dip in 3Q2024 corporate earnings and ensuing earning downgrades are making investors adopt a cautious approach. The Trump 2.0 US administration brings with it its own share of uncertainties which will play out when the new US govt start articulating its policies in January 2025. Although the Indian equity markets have seen some correction, challenges around bid-ask spreads in private transactions remain. While we remain cautiously optimistic in the medium term, for the next 2-3 months, we project tepid PE/VC investment activity,” says Soni.

On the exit front, PE backed IPOs and open market exits are expected to reduce significantly if volatility in midcap-small cap space continues, he adds.