Private equity investment deals slowed in 2023-24: Wealth 360 One report

The business of striking deals in the country has been robust this year, with an average of three private investment deals being finalised daily.

The number of deals and their total value had decreased by one-third compared to financial year 2022-23, and they were significantly lower than the peak seen in 2021-22, when investment professionals were practically competing to invest, with six companies securing funding each day, as per a report titled 'India Invests' by Wealth 360 One.

Private investment experienced a correction, with funding from investors, especially venture capital firms, decreasing since the surge three years ago, which coincided with the peak of the pandemic.

Nevertheless, Wealth 360 One asserted that there was a ray of hope when looking at the deal-making activity in the most recent quarter.

"Although there was a further decline in both the number of deals and the total funding amount, bankers were optimistic that the slowdown would soon stabilize," the report read.

The startup funding in India registered a decline of 17 per cent in 2023-24 as compared to the previous year. In 2021 the investment professionals were getting on average six deals daily but in 2024, it has declined to three.

The report highlights that the bigger deals, over USD 25 million, which usually happen when a startup is growing, have also decreased. This means there's less money going into startups overall, especially in the medium to large-sized deals. Late-stage venture capital investments have been hit hard too.

Startups raised nearly USD 8 billion from investors this year, marking a 50 per cent decrease from 2022-23.

As per the Ministry of Commerce and Industry data, India is home to 111 unicorns with a total valuation of USD 349.67 billion. Out of the total number of unicorns, 45 unicorns with a total valuation of USD 102.30 billion were born in 2021 and 22 unicorns with a total valuation of USD 29.20 billion born in 2022. In 2023 only one unicorn emerged.

According to the report, consumer-focused sectors and technology are facing the most caution from investors. These sectors are experiencing a big drop in the number of deals and the total amount of money. But the industrial and materials sectors are staying steady, while others like financial services and healthcare are doing better.

"The broader decline in dealmaking didn't affect all sectors uniformly. Industrials were almost at the same level, and materials reported more transactions in the financial year 2023-24. The financial services sector was on the verge of reaching its previous level. Healthcare, too, showed spark, but deals in consumer-focused sectors and tech dropped," the report noted.

That said, the positive aspect emerged in the listed space, where both public market deals and pre-IPO deals nearly reached previous highs, signalling resilience in those segments.

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