TLDR:
- Legacy companies received 75% of private equity and venture capital investments in 2023.
- Investments in traditional sectors like healthcare and retail increased, with PE funds showing a preference for established companies.
Article Summary:
Traditional companies outperformed startups in attracting private equity and venture capital investments in 2023, with legacy companies securing 75% of the funds. This shift was driven by the established business models of legacy companies, which were more appealing to PE funds. While PE funds have historically focused on established firms, they have also started investing in new age tech startups like Dream11 and Sugar. In 2023, 75% of PE-VC investments were directed towards traditional sectors such as healthcare, retail, energy, and advanced manufacturing, compared to 60% in the previous year. This increase was partly due to record-high investments in healthcare, as well as PE investments in companies like Reliance’s retail unit. Despite a slowdown in VC funding, total PE-VC investments amounted to $39 billion in 2023. India’s share of PE-VC investments in the Asia-Pacific region has been growing, while China’s share has declined. Analysts attribute this trend to favorable policies in India, which have attracted global firms looking to diversify production outside of China. Looking ahead to 2024, analysts anticipate continued growth in investments in India, driven by factors such as production-linked incentives and export promotion initiatives. Several global and domestic PE and VC funds have raised new funds and are actively seeking investment opportunities in India. The expansion of India-based teams by PE funds, as well as the entry of global funds like KKR and Blackstone into new asset classes, indicate a positive outlook for the investment landscape in India.
