New Delhi: Private Equity (PE) investments in India fell by 42 per cent across sectors in 2022, as compared to the previous year, a new report has found.
Private equity refers to investments made by individuals or institutional investors who invest in different entities with the hope of getting profits.
The sum of equity investments in 2022 was only worth USD 23.3 billion, the lowest annual PE investment in India since 2019’s USD 15.8 billion, the India Private Equity Snapshot for 2022 report has claimed. Published Monday, it has been put together by Refinitiv, a global provider of investment and financial data.
According to the report, PE investments in the fourth quarter (Q4) of 2022 totalled USD 3,613 million, an 8.1 per cent decline from the third quarter (Q3) of last year, when the investment had been USD 3,933 million.
The Q4 investments last year were 67.2 per cent less than in the same period the previous year. In 2021, the Q4 investment figure was USD 11,006 million.
Total number of PE deals in Q4 of 2022 also reduced from that in the previous quarter. According to the report, a total of 333 deals took place in Q4, as compared to 443 in Q3.
“Geopolitical tensions, rising interest rates, and recession fears made global investors cautious in making investments. India witnessed a drop in private equity investments this year by 42 per cent compared to last year,” Elaine Tan, senior analyst, Refinitiv, was quoted as saying in the report.
Tan added: “This is the lowest annual period for PE investments in India since 2019 (USD 15.8 billion), but still relatively elevated compared to historical levels. There is growth in the number of deals and number of companies receiving investment injections compared to a year ago, as deals were made in smaller sizes and investors increasingly shifted their focus into other high-growth markets such as India.”
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Investments in internet specific, computer software companies maximum
In the past five years, between 2017 and 2022, the biggest investment in PE had been in Q3 2020, when a total of USD 23,581 million was invested in Indian companies.
According to the India Private Equity Snapshot, 2022, when it came to individual sectors, internet-specific and computer software companies continued to attract maximum PE interest. At the same time, investments even in this sector have come down as compared to that in the previous year. Meanwhile, industries catering to communications, agriculture, fishery and forestry have witnessed a significant increase.
“Sum of equity invested in the Internet Specific sector has decreased by 57.4 per cent, with the number of deals declined to 528 (2022) from 556 (2021). Computer Software (-46.4 per cent year on year), Financial Services (-34.6 per cent year on year), as well as Medical and Health (-26.4 per cent year on year) have witnessed a decline in the sum invested as compared to 2021.”
It added: “Industries catering to Transportation (93.0 per cent year on year), Communications (225.6 per cent year on year), Agri/Forestry/Fish (215.8 per cent year on year) have witnessed an increase in the sum equity invested.”
(Edited by Poulomi Banerjee)
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