MUMBAI: Private equity (PE) and venture capital (VC) investments in India began 2025 on a strong note, surging 37 per cent in January 2025 to $6.3 billion, compared to $4.5 billion in December 2024, according to a report by EY and the Indian Venture and Alternate Capital Association (IVCA). However, investments were 9 per cent lower than in January 2024, when they stood at $6.9 billion.
The report highlights a favourable macroeconomic environment, strong fiscal health, and stable government policies as key drivers of India’s PE/VC ecosystem. With volatility in midcap and smallcap indices declining, deal activity and closures are expected to rise.
“The recent market correction signals more balanced conditions ahead, reinforcing India’s attractiveness as a leading PE/VC destination. International general partners (GPs) will continue to shape the landscape, while the pullback in the startup segment presents unique opportunities, particularly in Tier-II and Tier-III cities, known for their untapped markets and cost advantages,” the report said.
India’s investment landscape continues to be shaped by improving corporate earnings, a narrowing bid-ask spread, and a rise in initial public offerings (IPOs), the report added.
Sectors such as infrastructure, real estate, financial services, technology, e-commerce, and healthcare are expected to remain key areas of investor interest. Additionally, opportunities in the green energy transition, renewables, and pharmaceuticals are set to attract further capital.
In 2024, total PE/VC investments stood at $56 billion, the second-highest on record, driven by a 54 per cent increase in deal volume to 1,352 transactions.
Infrastructure remained the top sector, attracting $12.1 billion, while financial services overtook real estate for the second spot. E-commerce and technology investments grew 87 per cent and 56 per cent, respectively, according to the report.
“Despite the backdrop of geopolitical uncertainties, depreciating currency, stretched valuations, and market volatility, the resilience of India’s economic expansion has driven an increase in PE/VC activity,” said Vivek Soni, partner and national leader for private equity services, EY India.
He added that a declining interest rate curve, combined with a correction in public market valuations, will help reduce the bid-ask spread in private deals, leading to higher deal value and volume in the coming months.
Source: Business Standard
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