Viable Exit Option and PE/ VC Momentum Signal a Thriving Year for Private Capital

India is poised to experience a strong year for private equity and venture capital (PE/VC), driven by a record high in deal volume - with 1,352 deals and a 54 per cent YoY surge according to a recent report by the global accounting firm Ernst & Young (EY). This growth comes despite global challenges, with 2024 recording the second highest-ever investments of USD 56 billion, demonstrating the country's favorable framework with an increased focus on the depth of its capital markets, growth potential of certain sectors and an exciting startup ecosystem.

- PRINCE KARIAPPA

Vivek Soni, Partner and National Leader for Private Equity Services, EY India said that despite the backdrop of geopolitical uncertainties, depreciating currency, stretched valuations and market volatility, the resilience of India's economic expansion has driven an increase in PE/VC activity.

“The 2024 PE/VC activity—marked by rising investment volumes and exits—underlines investor confidence in India’s growth trajectory, with sectors like infrastructure, real estate, e-commerce, technology, and financial services leading the way. As we navigate the challenges and uncertainties that will come our way in 2025, our GDP growth, political and policy stability, favorable macroeconomic environment and the quality of Indian entrepreneurs will continue to offer significant opportunities for long-term investors, said Soni.

According to the EY report, PE/VC investments in 2025 began strong, with January recording a 37 per cent higher volume than December, despite the 9 per cent dip in comparison to January 2024. Experts' outlook for India’s funding ecosystem remains positive, with favourable macroeconomic environment, healthy fiscal and government policies. EY also anticipates, as volatility in mid-cap and small-cap indices declines, there should be an increase in deal activity and closures. Rajat Tandon, President, Indian Venture and Alternate Capital Association (IVCA) said that the country’s alternate capital landscape has matured significantly over the last 10 years and the surge in buyout transactions and private credit investments signals a shift towards long-term value creation and strategic growth.