Large deals, startup investments propel PE/VC investments to $4.5 billion in January: Report

Thirteen large deals of over $100 million each and heightened focus on startups helped the Indian venture investing ecosystem post a 180 per cent increase in the overall activity in January to $4.5 billion across 117 transactions.

The private equity and venture capital funds had invested $4.4 billion across 102 deals in the preceding month of December.

One of the major drivers for the activity in March was investments in startups by venture capital funds, which surged to $3.1 billion in 85 deals, which was way higher than the $700 million in the year-ago period but down from December's $3.2 billion, as per the monthly round-up by the consultancy firm EY and industry lobby grouping IVCA.

E-commerce was the most active sector when it comes to inflows, accounting for $1.7 billion of investments in 20 deals, it said.

"While we remain sanguine about the Indian PE/VC sector in the medium to long term, downside risks like rising global inflation, rising crude oil prices, interest rate tightening by the US Fed and impending elections in five key states in India remain key sensitivity factors to consider in the short-term," Vivek Soni, a partner at EY, said.

January recorded 13 large deals of over $100 million each aggregating $2.9 billion compared to three large deals worth $680 million in January 2021 and 12 deals worth $2.8 billion in December 2021, it said, adding the largest deal in January was Alpha Wave, Prosus Ventures, QIA, and others investing $700 million in Swiggy.

Soni said after a two-year decline amid the pandemic, fundraising by India focused PE/VC funds have picked up with January 2022 recording $3 billion in fundraises, with HDFC Capital Affordable Real Estate Fund's $1.9 billion for providing long-term, flexible debt capital across the lifecycle of real estate projects, being the highest.

The month recorded 14 exits worth $289 million compared to $342 million recorded across 10 exits in January 2021 and $825 million across 23 exits in December 2021, the report said.

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