According to the i2 report, the Private Equity (PE) deal activity saw a slight recovery with a 1% increase in volume compared to H1 FY 2024 but experienced a 9% decline in deal value. However, an average of three PE deals were finalised daily, signalling that the market remains active. Bengaluru led with 136 deals, but Maharashtra secured nearly twice the deal value of Karnataka, cementing its position as the leading state for deal value. The IT sector continued to be a key driver of deal activity, even as the telecommunications sector experienced a 3.2x jump in deal value, highlighting its growing importance in India’s digital infrastructure.
Startups made a significant comeback, with nearly 49% of total PE investments channelled into startup ventures. The angel and seed funding stages contributed 56% of deal volume, while venture capital deals surged by 26% compared to the previous period. Despite a slight blip in early-stage deals, growth-stage startups' deal volume rose 29%.
Additionally, Series E+ rounds led the charge in venture capital, with a 2.1x increase in funding value, reaching $2.6 billion. This accounted for 53% of total VC deal value, indicating strong confidence in businesses that have already demonstrated growth potential.
M&A activity in H1 FY 2025 also saw a 9% increase in volume compared to the previous year, with domestic deals contributing a substantial 79% of the total M&A deal volume. However, inbound M&A deals hit a 5-year low, reflecting growing caution among international investors. In contrast, outbound deals surged with a 10% increase in volume along with 3x jump in deal value, driven by Indian companies seeking growth opportunities abroad. The healthcare sector stood out with a 2.3x increase in deal value, driven by investments in multi-specialty hospitals and specialised healthcare segments.
The report also highlights a notable shift in exit strategies, with open market exits emerging as the preferred mode, contributing 59% of total deal volume. M&A exits, which previously dominated, fell to 26% in volume. Overall, exit deal value declined by 41%, with IT sector exits falling by 42% in value compared to the previous year. However, the consumer staples sector recorded a 2.5x increase in exit deal volume, showcasing the sector's growing investor confidence.
Yatin Shah, Co-founder, 360 ONE & CEO of 360 ONE Wealth, stated, “We’ve witnessed the rise of bold visionaries who are transforming the way business is done in the country. What was once a relatively small private equity (PE) and venture capital (VC) ecosystem has blossomed into a vibrant and diverse space, embracing innovation and disruption across sectors. Today’s startups are finding themselves taking longer pathways to significant funding rounds, a reflection of cautious investor sentiment amid macroeconomic uncertainties. Yet, despite these hurdles, startups have bounced back stronger than ever, driving a major share of PE funding this year. The 7th edition of India Invests report, brought to you by 360 ONE Wealth in collaboration with VCCEdge, serves as a reminder of just how dynamic and resilient India’s PE and VC sectors are. The challenges may be real, but the opportunities are vast. As investors embrace new, bold strategies, the future is full of potential for those willing to dive into the next wave of innovation.”
Click here to download the report- https://tinyurl.com/India-Invest-Edition-7
Key Highlights
Private Equity (PE) Deals:
· Deal value amounted to $12.2 billion, driven primarily by the IT sector
· 49% of PE investments were directed towards startups
· Bengaluru led in deal aggregation with 160 deals, while Maharashtra captured almost twice the total deal value compared to Karnataka
Startups:
· Angel deals dominated volumes, but Venture Capital deals saw a 26% jump
· E-commerce saw 3.3x growth in deals by value
· Growth-stage startup deals rose by 29% in volume
Mergers & Acquisitions (M&A):
· M&A deals showed a 9% jump in volume compared to HY23-24
· 79% of total M&A deal volume came from domestic deals, with inbound M&A volume hitting a 5-year low
· The telecommunication services sector saw a 2.9x rise in deal value
Unicorns & Decacorns:
· 7.7 years- Average time taken to become a Unicorn in India
· 11.1 years- Average time taken to become Decacorn in India
· Fastest to Unicorn status- Krutrim SI Designs and Sire LLP (1 year)
Exits:
· There was a 41% decline in exit deal value compared to the same period the previous year
· The consumer staples sector saw a 2.5x increase in exit deals by volume
· Open market exits dominated, accounting for 59% of total deal volume
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