PE & VC investments grow by 5% to US$ 56 bn

Private equity and venture capital investments rose by 5% in 2024, reaching US$ 56 billion after two years of decline. The year was marked by heightened activity, with 1,352 transactions, driven by a surge in credit deals and growth in pure-play PE investments. However, infrastructure and real estate investments experienced a slight decrease, and new fundraises dropped by 34%.

 

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Investments by private equity (PE) and venture capital (VC) industries in India grew by 5% in 2024, reaching US$ 56 billion after two consecutive years of decline, according to a report released by the Indian Venture and Alternate Capital Association (IVCA) and consultancy firm EY. The year was marked by increased deal activity, yet uncertainties in the global and domestic economic environment signal that 2025 may be more challenging.

Vivek Soni, a partner at EY, pointed out that 2025 could bring several uncertainties due to policy changes under the new US government. “Unveiled policies could significantly affect international trade flows, exports, currency movements, crude oil prices, and their cumulative impact on Indian macroeconomic conditions,” Soni said. He also highlighted slowing Indian consumption patterns and expressed hope for government interventions to address the issue.

Despite the challenges, the PE and VC industries remain “cautiously optimistic,” with expectations of ongoing market corrections reducing valuation gaps, potentially paving the way for deal closures.

The report highlighted a significant 54% increase in deal volumes, with 1,352 transactions completed in 2024. However, the average deal size declined compared to the previous year. A notable driver of this surge was a 254% increase in credit deals, with 310 transactions totaling US$ 10.8 billion.

In contrast, investments in infrastructure and real estate saw a marginal 3% decline, falling to US$ 20.9 billion from US$ 21.5 billion in 2023. However, this was offset by a 10% growth in pure-play PE investments, which rose to US$ 35 billion from US$ 31.9 billion in the previous year.

The year witnessed four billion-dollar deals, amounting to US$ 6.1 billion, compared to six deals worth US$ 9.6 billion in 2023. The largest deal of 2024 was Brookfield-sponsored Data Infrastructure Trust’s acquisition of ATC India Tower Corporation for US$ 2 billion.

The IVCA-EY report underscores the challenges awaiting the investment ecosystem in 2025. Key uncertainties include global economic conditions, geopolitical factors, and policy changes that could influence trade and investment flows. Domestically, efforts to revive consumption and improve investor confidence will be critical.

Nevertheless, the growth in deal volumes and the resilience of pure-play PE investments indicate a strong foundation for the sector. With careful navigation of economic headwinds, the PE and VC industries are positioned to capitalize on emerging opportunities in India’s dynamic market.

As stakeholders brace for 2025, the focus will remain on mitigating risks, leveraging market corrections, and exploring new avenues for growth amid evolving global and domestic landscapes.