MUMBAI: Private equity and venture capital investments in India totalled $13.7 billion across 284 deals in the first quarter of calendar year 2025, marking a 14 per cent decline in deal value and a 20 per cent decline in deal volume from the same period last year, according to an EY-IVCA report. The slowdown comes amid growing investor caution driven by macroeconomic headwinds yet to play out in the private markets.
Buyout deals emerged as the top investment strategy, totalling $5.2 billion across 20 transactions, up 22 per cent year-on-year (Y-o-Y). Growth capital followed with $3.1 billion deployed across 53 deals, slightly down from the year-ago period. Start-up investments surged 66 per cent Y-o-Y to $2.7 billion across 167 deals.
“While a few large deals helped sustain PE/VC investment value in Q1 2025, overall investor sentiment remains cautious on account of several macroeconomic and geopolitical factors, including policies being implemented by the current US administration, decisions on tariffs, interest rate changes by central banks, and declining capital market valuations. As private market valuations have yet to correct meaningfully, investors are in no rush to close deals and are monitoring evolving conditions to ensure that risks are adequately priced in,” said Vivek Soni, partner and national leader, private equity services, EY.
Exits rose 57 per cent Y-o-Y to $8 billion across 39 deals. Strategic sales accounted for more than half the exit value. Volatility in mid- and small-cap public markets has slowed initial public offerings (IPOs), typically a key liquidity path, putting the spotlight on private credit and structured secondary solutions as alternative exit routes, according to the report.
Technology emerged as the top-performing sector with $3.1 billion invested across 41 deals, more than tripling from Q1 2024. Infrastructure slumped 67 per cent to $2.3 billion, while financial services held steady at $1.6 billion.
Notable deals in the quarter include New Mountain Capital’s $1.5 billion acquisition of Access Healthcare and Temasek’s $936 million purchase of a 10 per cent stake in Haldiram Snacks.
There was a slight dip in large deals, with 32 transactions totalling $10.4 billion, down from 34 deals worth $11 billion during the same period last year. Despite this, large deals continued to dominate the landscape, accounting for 76 per cent of the total PE/VC investments in the quarter, stated the report.
Private credit investments in Q1 2025 totalled $1.1 billion, a 71 per cent drop from the same period last year.
“The volatility in the mid-cap and small-cap space has ensured the closure of the IPO window for most players, which is a dampener for exits. This, along with the reluctance of investors to engage at current valuations, can be a tailwind for private credit,” said Soni.
Source: Business Standard
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