India's PE-VC Investments Hit $39 Billion in 2023
ECONOMY & POLICY

India's PE-VC Investments Hit $39 Billion in 2023

Private equity and venture capital (PE-VC) investments in India surged to approximately $39 billion in 2023, marking a significant rebound to pre-pandemic levels, according to Bain & Company?s 'India Private Equity Report 2024,' released in collaboration with the Indian Venture and Alternate Capital Association (IVCA).

The report unveils a noteworthy trend as traditional sectors like manufacturing, healthcare, and energy accounted for about 75 per cent of the total investments, signaling a strategic shift from the previous year.

Manufacturing emerges as a frontrunner in investment attraction, with the sector witnessing a substantial influx of around $2 billion, growing at a commendable compound annual growth rate (CAGR) of approximately 20 per cent over the last two years. The sector's momentum is propelled by factors such as supply chain diversification, government incentives, and the availability of large-scale assets in the market.

In the electric vehicle (EV) domain, investments soared amidst projections of a 40 per cent penetration rate by 2030. Major OEMs dominated the landscape, contributing to over 70 per cent of the deal value. Significant transactions involving companies like Ola Electric, Ather Energy, Mahindra EV, and TI Clean Mobility underscored the sector's promising growth trajectory.

Gustaf Ericson, Associate Partner at Bain & Company, anticipates a surge in deal activity in advanced manufacturing, bolstered by factors like governmental incentives and the emergence of scaled assets across various segments.

Despite a subdued global outlook, India's PE-VC landscape is poised to remain resilient, with traditional sectors, particularly advanced manufacturing, expected to continue attracting substantial investments. The EV market is forecasted to witness robust deal activity, especially among OEMs planning capacity expansions or new product introductions.

Additionally, sectors like packaging and electronics production are slated for significant growth, driven by increasing demand and favorable industry dynamics. Global supply chain diversification is set to further bolster Indian manufacturers, particularly in export-oriented sectors like electronics and pharmaceuticals.

Leading funds, including Temasek, GIC, ADIA, and Brookfield, have diversified their portfolios into new sectors, reflecting the evolving investment landscape in India. Despite a decrease in venture capital investments, the focus remains on securing high-quality assets, emphasizing the resilience and attractiveness of India's market for private equity and venture capital investments.

Private equity and venture capital (PE-VC) investments in India surged to approximately $39 billion in 2023, marking a significant rebound to pre-pandemic levels, according to Bain & Company?s 'India Private Equity Report 2024,' released in collaboration with the Indian Venture and Alternate Capital Association (IVCA). The report unveils a noteworthy trend as traditional sectors like manufacturing, healthcare, and energy accounted for about 75 per cent of the total investments, signaling a strategic shift from the previous year. Manufacturing emerges as a frontrunner in investment attraction, with the sector witnessing a substantial influx of around $2 billion, growing at a commendable compound annual growth rate (CAGR) of approximately 20 per cent over the last two years. The sector's momentum is propelled by factors such as supply chain diversification, government incentives, and the availability of large-scale assets in the market. In the electric vehicle (EV) domain, investments soared amidst projections of a 40 per cent penetration rate by 2030. Major OEMs dominated the landscape, contributing to over 70 per cent of the deal value. Significant transactions involving companies like Ola Electric, Ather Energy, Mahindra EV, and TI Clean Mobility underscored the sector's promising growth trajectory. Gustaf Ericson, Associate Partner at Bain & Company, anticipates a surge in deal activity in advanced manufacturing, bolstered by factors like governmental incentives and the emergence of scaled assets across various segments. Despite a subdued global outlook, India's PE-VC landscape is poised to remain resilient, with traditional sectors, particularly advanced manufacturing, expected to continue attracting substantial investments. The EV market is forecasted to witness robust deal activity, especially among OEMs planning capacity expansions or new product introductions. Additionally, sectors like packaging and electronics production are slated for significant growth, driven by increasing demand and favorable industry dynamics. Global supply chain diversification is set to further bolster Indian manufacturers, particularly in export-oriented sectors like electronics and pharmaceuticals. Leading funds, including Temasek, GIC, ADIA, and Brookfield, have diversified their portfolios into new sectors, reflecting the evolving investment landscape in India. Despite a decrease in venture capital investments, the focus remains on securing high-quality assets, emphasizing the resilience and attractiveness of India's market for private equity and venture capital investments.

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