Startups attract US$ 1.1 bn amid VC-PE investments crash

Private equity and venture capital investments in India plummeted 68% year-on-year in May 2025 to US$ 2.4 billion, marking the weakest monthly performance in over a year, according to IVCA-EY. Large deals and buyouts saw sharp declines amid geopolitical uncertainty and valuation mismatches.

Private equity and venture capital investments witnessed a steep decline in May, falling 68% year-on-year to US$ 2.4 billion, as per a report by the Indian Venture and Alternate Capital Association (IVCA) and EY. This was the weakest monthly performance in at least a year, driven by geopolitical uncertainty, valuation mismatches, and cautious investor sentiment.

Only 97 deals were recorded during the month, marking a 24% drop compared to May 2024. Large-ticket deals above US$ 100 million were notably absent, with just six such transactions worth US$ 941 million—a sharp 83% decline from the US$ 5.6 billion seen a year ago. Compared to April, large deal value also dropped 75%. The largest deal in May involved Ares Management leading a US$ 216 million debt funding round for Bengaluru-based Century Real Estate, alongside SC Lowy. Another key transaction was Blackstone RE’s US$ 75 million PIPE investment in Embassy Developments, underlining interest in premium commercial assets.

However, the startup ecosystem showed resilience, with funding rising 21% year-on-year to US$ 1.1 billion. Logistics led the charge, supported by a US$ 200 million investment by Kedaara Capital and Vitruvian Partners in Porter (SmartShift Logistics). Fintech also performed well, with GIC investing US$ 150 million in Groww and Tiger Global injecting US$ 75 million into Cred. In healthcare, General Catalyst led a US$ 100 million round in PB Healthcare Services.

Buyout deals nearly vanished, crashing 96% to US$ 88 million. The only significant deal was Prime Offices Fund’s acquisition of Prius Platinum for US$ 88 million, a stark contrast to May 2024’s US$ 2.3 billion buyout value. Credit investments also saw a 77% drop to US$ 319 million.

Exits followed the broader investment slump, falling 60% to US$ 1 billion across 18 deals. Open market exits dominated, accounting for 77% of the total value. Carlyle’s US$ 320 million stake sale in PNB Housing Finance was the largest, followed by Antfin’s US$ 246 million sale in Paytm. Secondary exits totaled US$ 200 million, including Peak XV’s US$ 163 million partial exit from Porter. Ather Energy’s US$ 35 million IPO was one of the few public exits.

Despite the downturn, fundraising activity surged 391% to US$ 3 billion across 12 funds. The biggest was Quadria Capital’s US$ 1.07 billion healthcare fund. Synergy Capital raised US$ 714 million for industrial private credit, and Multiples secured US$ 430 million. KKR also announced a US$ 2.7 billion Asia Infra Fund 3.

“Domestically, early signs of positive momentum are emerging through robust GST collections, strengthening of Indian Rupee from the lows seen in the beginning of the year and the recent rate cut by the Reserve Bank of India which is expected to improve liquidity and provide further impetus to deal-making,” said Vivek Soni, partner and national leader, private equity services, EY India. He expects deal activity to recover in the second half if global uncertainties ease and valuation expectations align.