India witnessed $29.6 billion in private equity investments

  • Industry News
  • Jun 03,24
The investment distribution in 2023 saw a notable shift with traditional sectors such as manufacturing, healthcare, and energy, accounting for about 75 % of the total investments, up from around 60 % in 2022.
India witnessed $29.6 billion in private equity investments

Private equity and venture capital (PE-VC) investments in India totalled approximately $39 billion in 2023, aligning with the investment levels seen before the COVID-19 pandemic, according to Bain & Company’s annual ‘India Private Equity Report 2024’, released in collaboration with the Indian Venture and Alternate Capital Association (IVCA).

The investment distribution in 2023 saw a notable shift with traditional sectors such as manufacturing, healthcare, and energy, accounting for about 75 % of the total investments, up from around 60 % in 2022. The report highlighted that the manufacturing sector in India attracted roughly $2 billion in investments, growing at a compound annual growth rate (CAGR) of about 20 % over the last two years. This sector’s growth is driven by several factors, including the diversification of supply chains, governmental incentives, and a range of large-scale assets becoming available to the market. 

In the electric vehicle (EV) sector, with an anticipated penetration rate of 40 % by 2030, substantial investments were made. Major original equipment manufacturers (OEMs) were responsible for more than 70 % of the deal value in the past year, including significant transactions in companies like Ola Electric, Ather Energy, Mahindra EV, and TI Clean Mobility. 

Gustaf Ericson, Associate Partner, Bain & Company, said, "Advanced manufacturing is expected to witness an increase in deal activity in the near to mid-term, driven by China+1 tailwinds, government incentives such as PLI and emergence of scaled assets across multiple segments. We anticipate that electronic manufacturing services, packaging, and EV players will greatly benefit from this favourable environment in the coming years as well." 

Despite a subdued global outlook for 2024, the PE-VC deal making landscape in India is expected to remain tempered, with traditional sectors, particularly advanced manufacturing, likely to attract significant investments due to solid fundamentals and supportive government policies. The EV market is also expected to experience robust deal activity, particularly among OEMs that are planning capacity expansions or new product introductions, and in the charging infrastructure, including battery-swapping players looking to expand their geographic footprints or venture into new EV segments. 

The packaging sector is projected to grow at a CAGR of about 10 % between 2023-27, driven by increasing demand from the food and beverage industry and a shift towards more sustainable packaging options. 
Electronics production in India is forecast to expand at a 25 % CAGR from 2023 to 2027, fuelled by growth in sub-segments such as mobile phones, IT hardware, and consumer electronics. 

Furthermore, global supply chain diversification is expected to benefit Indian manufacturers, particularly in export-oriented sectors like electronics, pharmaceuticals, and chemicals, where India boasts globally competitive scale players supported by robust government incentives. As India-focused funds increasingly diversify their portfolios, many leading funds, including Temasek, GIC, ADIA, and Brookfield, have expanded into new sectors over the past three years. In 2023, India witnessed a total of $29.6 billion in private equity investments, a decrease of 18 % from the $36 billion peak seen in 2022, with PE investments comprising about 75 % of the total PE-VC deal value. 

This trend reflects the continued emphasis on securing high-quality assets despite a significant reduction in venture capital investments, which dropped to $9.6 billion in 2023 from $25.7 billion in 2022.

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