Private Equity and Venture Capital Investments Drop by 40% to USD 8.8 Billion in Q2 2023 Amid Geopolitical Tensions

Private equity and venture capital investments fell by 40% to USD 8.8 billion in the September quarter, according to a report released on Friday. Despite this decline, the number of deals increased by 26% to 283 transactions during the same period, as reported by industry group IVCA and consultancy firm EY.

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Geopolitical tensions have led to uncertainty, causing investors to become more cautious and slowing down deal-making activities. Vivek Soni, a partner at the consultancy firm, mentioned that this sluggishness might continue if global uncertainties persist. However, he noted that the firm's outlook remains cautiously optimistic due to India's strong fiscal health.

Investment Trends and Key Deals

Large deals exceeding USD 100 million dropped significantly to 21, with a total value of USD 5.5 billion. Pure-play PE/VC deals, excluding real estate and infrastructure, decreased by 30% to USD 6.5 billion. The largest deal in pure-play PE/VC investments was EQT's acquisition of GeBBS Healthcare Solutions from ChrysCapital for USD 860 million.

The quarter saw exits amounting to USD 8.2 billion, which was an 8% decrease compared to the previous year. In terms of volume, exits were down by 19% with 71 transactions recorded. Additionally, PE and VC funds raised USD 1.7 billion for future investments during the quarter, marking a 37% decline from the previous year.

Fundraising Activities

The most significant fundraising effort was by 360 ONE WAM, which secured USD 500 million for its secondary fund. This highlights a trend where funds are being raised for future investments despite the overall decline in investment activity.

The report underscores how geopolitical tensions have impacted investment sentiment, leading to a cautious approach among investors. While large deals have decreased significantly, there remains an optimistic outlook due to India's robust fiscal position.