Private equity and venture capital investors in India saw a modest rise in the value of exits in 2024, even as the exit deal volume dipped.
PE-VC investors encashed as much as $23.34 billion in 2024 through various exits from their investments in India, marginally higher than 2023’s value of $23.28 billion, show data compiled by Venture Intelligence.
Only 281 exit deals were clocked in 2024, compared with 299 the previous year. This includes public market sales, secondary sales, strategic sales, and buybacks.
Even as the gains realised by PE-VC firms on their investments inched up in 2024 vis-à-vis 2023 — bringing some respite to investors watching the exit landscape — there is still a lot of catching up to do.
“A lot of funds that were raised in the 2012-2015 vintage are yet to fully realise a DPI of 1x in the venture space,” said Pratip Mazumdar, co-founder and partner at the technology-focused fund Inflexor Ventures. “A lot of exits have happened, but, both in number and value, PE-VC exits are yet to catch up in full swing,” added Mazumdar.
On the flip side, the “cumulative exit deal value in India over the last three years is the highest in any three-year period historically,” Darius Pandole, managing director and CEO of private equity and equity AIFs at JM Financial, had earlier told DealStreetAsia in an interview.
“It is interesting to note that these exits took place across sectors and types — IPOs, sales to financial investors, and sales to strategic investors, etc.,” he had added.
Preferred exit route: public markets
Unsurprisingly, the most popular mode of exit for PE-VC investors in 2024 was through share sales on Indian bourses, aka public market exits.
The value of public market exits in India in 2024 stood at $14.8 billion, accounting for 63% of overall exit value, and up 11% from 2023. The volume of public market exits also rose 6.8% year-on-year to 172. Both deal volume and deal value were at a five-year high as investors made the most of India’s buoyant stock markets.
There were also 58 exits through secondary sales valued at around $5.8 billion, i.e. 25% of the exit value in 2024.
Strategic sales raised $2.4 billion, accounting for roughly 10% of 2024’s overall exit value.
The value of strategic sales, which was a popular exit route for PEs and VCs in 2021, has declined in the last three years. A strategic sale is usually the most desirable exit route for PEs and VCs, given that strategic buyers, who are from the same industry as the target company, tend to be the most natural acquirers.
The value of strategic sales had topped public market exits in 2021 but has been on a free fall since then.
The volume of strategic sales, which had exceeded public market exits in 2022, has also been on a decline in the last two years.
The biggest public market sale of the year was by Partners Group and Kedaara Capital from the IPO of Vishal Mega Mart in December. This was followed by Blackstone’s sale of a 15.1% stake in IT major MphasiS in a bulk deal on the National Stock Exchange (NSE) for $808 million in June.
The biggest exit of the year was Advent International’s $1.6 billion strategic sale of its stake in Bharat Serums & Vaccines to Mankind Pharma in July.
IPO frenzy fuels exits
PE-VC Investors could cash out of their portfolio companies in 2024 amid Inda’s IPO market boom fuelled by stock markets that defied gravity.
India’s benchmark index, the BSE Sensex, is up 8.5% in 2024 as on Dec. 26. The index had risen 18.7% year-to-date when it closed at a lifetime high of 85,836 points on Sept. 26, before sliding in the last few months of the year in line with global trends.
The booming stock market, combined with a strong GDP growth of 6-7%, have made conditions ripe for a robust IPO market.
India had a landmark year for IPO activity in 2024, leading the world in the number of IPOs for the first time with 327 listings that raised $19.9 billion, according to the EY Global IPO Trends 2024 report. The IPO volume was up 36% from 2023, while the IPO proceeds surged 150%.
India’s BSE Ltd and the National Stock Exchange hosted 27% of all global IPOs in 2024, and were the most active exchanges globally, according to the EY report.
Notable IPOs in the year included Hyundai Motor India’s $3.3 billion initial share sale, Swiggy’s $1.3 billion public market debut and NTPC Green Energy’s $1.2 billion public market foray.
The mega share sales helped to lift IPO proceeds on BSE Ltd. and NSE to $19.9 billion, or 16% of global proceeds, which was the second highest globally. The US claimed the top spot by IPO proceeds in 2024 with $32.8 billion raised across 183 share sales on NYSE and Nasdaq.
“As companies shift their manufacturing bases away from China, India has become an attractive alternative due to its large and growing consumer market and vast labour force. This shift is enhancing India’s position in global trade and supply chains, leading to increased economic activity and a more favourable environment for public listings,” according to the EY report.
