Private Equity And Venture Capital Funds' Investments Decline 4% To $5.3 Billion In March

Private equity and venture capital funds' investments declined by 4 per cent to $5.3 billion in March 2023 as against the year-ago period, a report said on Monday. In terms of number of deals, there were only 82 transactions in March 2023 as against 125 in the year-ago period, as per the report by industry lobby IVCA and consultancy firm EY.

For the January-March quarter, the deal activity declined by 21 per cent by the value of investments to $13.3 billion as compared to the year-ago period. The consultancy firm's partner Vivek Soni said collapse of Silicon Valley Bank led to a spike in uncertainty, further exacerbating the tight funding environment for startups.

"As a result of these headwinds, the startup space is expected to continue witnessing consolidation as high-burn companies struggle to raise funds in up rounds and will look to merge/sell to their well-funded peers in primarily stock swap transactions," he said.

The overall deal activity is down because of the mismatch between what the investors are bidding for and the price which promoters are asking for, he said, adding that deal closures are getting stretched. March 2023 recorded 14 large deals (deals of value greater than $100 million) aggregating $4.3 billion as compared to 13 large deals worth $2.9 billion in March 2022, the report said.

Large deals in March 2023 include GIC, ADIA and Orix's $700 million in Greenko Energy and GQC Partners' $1.3 billion investment in Adani Group entities, the report said. PIPE or Private Investment in Public Equity investments were the highest in terms of value in March 2023 at $2.4 billion across 10 deals compared to $700 million invested across eight deals in March 2022, it said, adding that infrastructure topped the sectors by garnering $2.4 billion of investments.

The overall exits stood at $1.753 billion across 30 deals in March, with the $600 million open market exit in Sona BLW Precision Forgings topping the charts. There were three fundraises of $1.953 billion in March 2023, up from $869 million in February and $1.198 billion in March 2022.