PE-VC dealmaking to remain tempered in 2024: Bain & Company 

Bain & Company, a global consultancy, anticipates Private Equity–Venture Capital (PE-VC) deals in India will stay cautious and restrained in 2024. However, they believe the robust fundamentals make the Indian outlook positive and the country has the potential to become an $80-100 billion market for such activities within the next 4-5 years, according to a senior official.

Traditional sectors such as healthcare, advanced manufacturing, infrastructure and renewable energy are likely to attract outsized investments in India in 2024, Prabhav Kashyap, Partner and a member of Private Equity Practice at Bain & Company, told businessline.

He was discussing the findings of Bain & Company’s India Private Equity Report 2024.

The Indian PE-VC deal activity had declined 35 percent from $62 billion in 2022 to $39 billion in 2023. The decline was more pronounced on the venture capital side where it fell from $26 billion in 2022 to about $9.5-10 billion in 2023. 

Out of $62 billion, PE activity was $35-36 in 2022, but it came down to $29-30 billion in 2023. Private equity saw a drop, but not a dramatic one, Kashyap said.

“Is there a reason to believe that $ 9.5-10 billion on venture side can drop some more in 2024. Maybe. Is there a reason $ 30 billion on private equity flows will go up in 2024, I think so”, he added.

“I think, structurally, ingredients are there for India to be much larger market of 2.5X in 4-5 years time from now. That is about $80-100 billion a year PE-VC dealmaking activity”.

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Kashyap said that he does not see any reason to believe there would be a slowdown in private equity-VC activity in India in 2024.

“If anything I would argue that on the margin it would be a notch or two faster than what we saw last year. I don’t want to say it will be a hyper growth year, but it is definitely on the path to recovery.  I don’t expect it to be decline”, he said.

On funding winter in the Indian PE-VC landscape, Kashyap noted that PE market did not per se experience a funding winter. “On the VC side, we should wait a bit more to say it is definitely past us”, he added.

India is going to be market where there will be cautious optimism.

“People are going to look at opportunity they want to double down on. There is also broader macro overhang we need to keep in mind.  Next couple of quarters there will be flight to quality. There will be set of deals where there will be lot of interest”, Kashyap said.

He said that buyout activity is also expected to increase this year. 

Healthcare investments reached a record $5.5 billion in 2023, fuelled by ongoing consolidation in multi-speciality providers and the emergence of scale single-specialty assets with attractive business profiles. “Healthcare is going to see salience in 2024”, he said.