Private equity investment inflows into the country fell 42% in 2022 from a year ago to $23.3 billion – the lowest annual inflows since 2019, when they stood at $23.3 billion. $15.8 billion, but still relatively high compared to historical levels, said Elaine Tan, senior analyst at Refinitiv, the trading arm of LSEG that provides financial market data and insights.
The report did not specify how many deals were completed during the year.
During the December quarter, private equity investments totaled $3.61 billion, down 8.1% sequentially from $3.93 billion and fell 67.2% year on year then they were $11.06 billion, according to the report.
The total number of transactions in the fourth quarter fell 24.8% to 333 from 443 in the third quarter and 19% from the fourth quarter of 2021, when transactions stood at 411, according to the report.
Tan attributed the sharp decline to ongoing geopolitical tensions, rising interest rates and fears of recession in Western economies, all of which made global investors cautious about their investments.
Internet-specific software and transportation attracted the majority of funding, accounting for 66% of the total during the year, or $8.58 billion. The internet-specific sector saw a 57.4% decline in inflows, while the number of transactions fell to 528 in 2022 from 556 in 2021.
Computer software companies saw funding drop 46.4%, financial services (down 34.6%), as well as medical and healthcare saw the same 26.4% drop from levels of 2021.
However, transport industries saw inflows nearly double with a 93% jump, communications soared 225.6% and agriculture/forestry/fisheries jumped 215.8% in terms of fund inflows. .
Tan expects this trend to continue as investors diversify away from China amid heightened uncertainty, and India and Southeast Asia could benefit from this shift.
Of the total, domestic private equity funds raised $13.7 billion in 2022, up 163.2% from 2021, when they were just $5.21 billion. This is pushing substantial capital waiting to be deployed as India-based private equity fundraising activity totaled $32 billion – from 2019 to 2022.
Think & Learn and VerSe Innovation, which received $800 million each from EPs during the year, followed by Bharti Airtel and Bundl Technologies which received $700 million each, Tata Motors Electric Mobility ($494.7 million), Reliance Retail ($343.5 million), NTEX Transportation Services ($330 million), Delhivery ($304 million) and Busybees Logistics Solutions and Renkube each received $300 million.
