With just 2024 behind us, what could be said of India’s PE ecosystem, which would only include growth PE, buyouts, PIPE, late- and other stage- companies?
One report outlined that PE activity between January 2024 and November 2024 recorded a total value of close to $31 billion across nearly 1030 deals, which was close to a 25% increase in value and nearly a 20% rise in deal count, compared to about $25 billion across roughly 860 deals during the same period in 2023.
What were 2024’s top PE investments, as of November 30th 2024?
As expected, infrastructure investments is what it’s at. A PE firm, like Brookfield, seems to be looking into how infrastructure gets developed, be it with telecom through ATC or renewable energy through Leap Green. India was said to have been ranked 33 out of 39 in the 5G Connectivity Index for Q2 2024, but, it’s said that, in areas like 5G revenue growth, affordability of data and video quality, India’s ranked pretty high, so there’s a lot for ATC to leverage to grow, which would benefit Brookfield, especially with the whole 5G rollout ambitions. The same could be said for Leap Green, since India has been deemed to be the world’s 3rd largest consumer of electricity, as well as the 3rd largest renewable energy producer with about 40% of energy capacity installed in 2022 coming from renewable sources. A similar thought process might follow for GIC’s investment in Sterlite Power and how the PE firm might look at how the infrastructure of its transmission could play some role in India’s green energy equation. Maybe, there’s some outsized value in that.
And while there was said to be deficit liquidity in India’s banking system hitting all-time highs, NBFCs, like Shriram, Aavas and Vastu, seemed to still get funding from PEs. Maybe, if there are liquidity constraints of traditional banks or if they’re not able to do focused lending in certain sectors, maybe, that’s why PEs might be going the NBFC route. Especially if NBFCs could help MSMEs – considered to be the backbone of India’s economy – that could turbocharge the economy.
Plus, q-comm is taking India by storm, so it might make sense why Zepto’s on the list. Typically, PE might go for more mature firms, so Zepto’s ranking is interesting. But, could it be that Zepto has demonstrated some solid PMF, even though it’s still in loss mode? Has it proven that it’s become established and the nature of its market, that’s cash-intensive, indicates the necessity of significant capital?
With IT, there might be a notion that India’s a back-office to the rest of the globe. That might sound like it has negative connotations, but, maybe, a place, like Altimetrik, might be looking to capitalize on that. Who said digital services can’t be high-margin? And it’s said that India’s healthcare innovation market could hit about $60 billion by 2028 from its $30 billion industry value in 2023 with pharma services said to lead the sector, followed by HealthTech. So, that might make sense why KKR has backed Healthium Medtech, which is said to export products to about 80 countries. If Healthium could produce or is producing good-quality medical devices and products, could that mean India might be seen as a global MedTech hub?
And if there are some prominent PE investments in renewable energy or MedTech or housing finance, could there be some element of ESG still afoot? Even while it feels like ESG might be losing its power as it faces opposition and criticism in Western markets, could going “sustainable” be the pragmatic move that also happens to do some good?
And how does this compare to 2023?
Some large-cap investments were present in 2023 with Manipal Hospital at around $2.4 billion, HDFC Credila at about $1.3 billion & Reliance Retail and Avaada each at $1 billion in sectors that are deemed to be proven and scalable. Compare that to 2024, where there seem to have been more mid-market deals. While there may have been more funding into traditional healthcare infrastructure of enterprises, like Manipal and Care, 2024 seems to have a pivot towards MedTech. Maybe, the tangible benefits of AI may have bolstered that pivot. Does that mean, overall, there’s venturing by PE firms into sectors that might be a bit young, like q-comm and MedTech?
So, what could 2025 look like for India’s PE ecosystem? Will it invest in the disruptors or will it maintain its sights on sustainable, scalable and proven fundamentals?
