Key Highlights:

  • Private Equity (PE) deals amounted to a total value of $ 23.88 billion.

  • The number of funds raised soared 31% to hit a five-year high in FY24.

  • Angel and seed funding made an impressive 55.48% contribution to the overall deal volume.

  • Startups garnered nearly $ 8 billion from investors in FY24.

  • An average of three private investment deals were finalised daily.

  • Startup investments contributed 77.82% to the total PE investments by volume and 32.61% by value.

  • Among M&A deals, there was a massive 91% rise in the value of consumer discretionary deals.

360 ONE Wealth, earlier known as IIFL Wealth Management, in collaboration with VCCEDGE, has launched the sixth edition of the India Invests (i2) report for FY24. The i2 report offers interesting insights and analyses that have emerged in India’s dynamic Private Equity (PE) and Venture Capital (VC) ecosystem in FY24, signalling a potential end to the funding winter. It also sheds light on the Mergers & Acquisitions (M&A) space, exits and the evolving startup environment.

According to the i2 report, the Indian dealmaking landscape in 2024 remained robust, with an average of three private investment deals being finalized daily. However, the number of deals and their total value decreased by one-third compared to FY23. In terms of deal value, both public market deals and pre-IPO deals nearly reached previous highs, signalling resilience in the segments. However, early-stage startup dealmaking took a significant hit, with both angel/seed deals and VC deals decreasing by nearly 29% each, in FY24.

Although deal activity slowed down, the median value of transactions improved, surpassing the previous peak seen during the investment rush in FY22. Similarly, the average value remained strong, exceeding the pre-pandemic level. This indicates that companies continued to attract significant investments from private investors.

Maharashtra surpassed Karnataka in total investment inflow and the number of deals, with Mumbai leading the way. Delhi-NCR remained a key hub, while Bengaluru saw a drop in the deal volume. Chennai rose to the fourth spot, replacing Pune. Old economy sectors attracted more investors amidst the struggles of the new economy.

In terms of exit activity, Information Technology retained its top spot, despite a pullback. Although the total number of exits rose marginally, the value of these exits exceeded $ 14 billion, representing a fifth more than the average, denoting a promising outcome for investors.

M&A activity in India fell sharply in FY24 as the cost of capital remained high in the wake of a tight interest rate scenario worldwide and as macroeconomic uncertainties weighed. The total value sank 69% from FY23, mainly due to the distortionary effect of the monumental mega-merger between HDFC Ltd and HDFC Bank.

Telangana was upstaged by Tamil Nadu in M&A deal activity, claiming the fifth spot, and surpassed Delhi in value to secure the fourth rank. Maharashtra retained its lead in both volume and value. Haryana surpassed Karnataka in M&A value. Mumbai and Delhi-NCR remained primary hubs, with Bengaluru ranking third. Chennai emerged, matching Pune in volume and surpassing it in value.

Almost all sectors within the startup domain were affected this year. The number of deals in HR tech, prop-tech, edtech, health tech, and travel tech halved. Fintech, media tech, and agritech also experienced a sharp deceleration in activity. On the other hand, logistics tech stood out, maintaining the same level of activity. Aggregate funding to logistics-tech ventures nearly doubled this year.

Mr. Yatin Shah, Co-Founder of 360 ONE and Joint CEO of 360 ONE Wealth, said, “While recent times have seen a fluctuating M&A landscape influenced by various macroeconomic and geopolitical factors, there is anticipation of a resurgence in deal-making as we progress into this fiscal. While there was a visible drop in the value and number of deals, across PE, startups, and M&As, the 41% increase in total exit value highlights the liquidity at hand and the potential for accelerated growth in FY25. Factors such as moderating inflation, anticipated declines in interest rates, and recent positive movements in the stock market contribute to this positive outlook. Despite the number of startups that received funding dropped by 17%, on average, nearly three startups received a cheque every day from an angel investor or a venture capital fund.”

Mr. Anirudha Taparia, Co-Founder and Joint CEO, 360 ONE Wealth, commented, “The global forecast for private capital in 2024 shows a notable optimism stemming from a more stabilized investment landscape. We expect a gradual uptick in mergers & acquisitions activity during FY25. With an exit value of $ 9.5 bn, open market transactions doubled, presenting opportunities for buyers and sellers and becoming the primary driver of exits for alternative investors. Investment via bridge funding surged by over 50%, even as early, growth, and late-stage funds saw their total funding amounts halving in FY24.”

The India Invests Report FY24 is the sixth edition of a regular series, which 360 ONE Wealth in association with VCCEDGE publishes bi-annually. The data included in the report is up to March 2024.