August 2023 marked the highest PE/VC exits in 22 months; details inside

According to the Indian Private Equity and Venture Capital Association-Earnest and Young (IVCA-EY) monthly Private Equity and Venture Capital report for August 2023, it was noted that there were investments totalling USD 5.2 billion in 67 deals during the month. This represents 127% higher than the investments made in August 2022 and 18% higher than in July 2023. The number of deals in August 2023 was lower by 27% YoY.

In the same period, exits amounted to USD 4.3 billion through 37 deals marking a YoY increase of 35% in value. This exit value marked the highest in 22 months, surpassing the USD 3.2 billion recorded in August 2022 through 28 deals. Interestingly, open market exits comprised 57% of the total exit value which accounts for USD 2.45 billion.

Furthermore, the total amount raised in fundraises reached USD 1.5 billion, a significant increase from the USD 240 million raised in July 2023 and the USD 583 million raised in August 2022.

IVCA-EY refers to a collaborative effort between two entities that are the Indian Private Equity and Venture Capital Association (IVCA) and Ernst & Young (EY), a multinational professional services firm. The IVCA is an industry association in India that represents the interests of private equity and venture capital firms.

Last month, growth deals valued at USD 2.4 billion were the highest, encompassing 14 deals, compared to the USD 176 million invested across 9 deals in August 2022. This represents a 12-fold increase in value terms YoY. PIPE investments, on the other hand, recorded USD 2.1 billion across 18 deals in August 2023, marking a more than 20-fold increase YoY in terms of value.

From a sector perspective, infrastructure led the way in August 2023, driven by a significant investment by GQG Partners in Adani Power Limited, totalling USD 1.8 billion in PE/VC investments across six deals. Retail and consumer products ranked as the second-largest sector, with USD 1 billion recorded across four deals.

Startups are currently facing a funding downturn, with VC investments in Q3 FY2023 expected to be the lowest in eight quarters. Nevertheless, there are some positive aspects for India.

In August 2023, there was a significant global and Indian slowdown in VC investments due to high valuations, governance issues, and a lack of late-stage investor participation.

However, India’s startup ecosystem remains resilient due to demographics, talent, and market strength. India-focused VC fundraising is robust, and the long-term outlook is positive, driven by substantial dry powder held by VCs. Despite the current funding winter, India is well-positioned to bounce back as the economy remains strong.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.