The year 2023 presented a dynamic yet challenging set of early-stage investments with distinct trends across sectors:
Private Equity
Private equity deal value and volume faced headwinds, mirroring global economic pressures. A significant 47% drop in PE deal value underscored investor caution, with deal volume shrinking by 34% from 2022. Inflation, high borrowing costs, and geopolitical tensions curbed activity, although angel and seed investments remained the most common category, focusing on businesses with resilient models. The Information Technology sector maintained dominance, with 607 transactions, though at reduced levels from the previous year. Major deals like Baring Private Equity Asia and Crystal Capital’s $1.35 billion investment in HDFC Credila and the $1.07 billion funding of Avaada Ventures highlighted areas of significant inflows.
Private Equity Exits
PE exit deals in 2023 dropped to a five-year low, with only 165 transactions completed, a reflection of sluggish market conditions and conservative exit valuations. The open market remained the most lucrative exit route, contributing significantly to total exit value. Sectors like Financials and Consumer Discretionary saw substantial increases in exit deal values, while materials and IT faced pronounced declines in exit deal volume.
Mergers & Acquisitions (M&A)
M&A activity experienced a downturn as deal value dropped by 74% from last year’s highs, influenced by high-interest rates, inflationary impacts, and geopolitical conflicts. Domestic M&A showed a notable 82%, year-on-year, decline in deal value. Information Technology led in deal volume, sectors like Energy and Consumer Discretionary recorded growth in deal value, driven by a focus on renewable assets. Notable deals included Tata Group’s acquisition of Air India and several energy-related transactions, such as the acquisition of Mercator Petroleum Ltd. by Indian Oil Corporation Ltd. and the acquisition of Unison Enviro Pvt. Ltd. by Mahanagar Gas Ltd.
Equity Capital Market (ECM)
Despite market volatility, ECM saw an increase in both deal volume (up 43%) and deal value (up 23%). The industrial sector led in ECM activity with 61 transactions, while Initial Public Offerings surged to a five-year high in deal activity. Qualified Institutional Placements dominated ECM deal values, with Bajaj Finance’s $1.6 billion placement marking one of the largest transactions.
Looking for more in-depth data on these trends? Download the VCCEdge annual report for a detailed breakdown of the private equity, venture capital, mergers & acquisitions, and equity capital market deals.
