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Mumbai: According to the IVCA-EY monthly PE/VC roundup, October 2022recorded investments worth US$3.3 billionacross 75 deals, includingsixlarge deals worth US$2.2billion.Exits were recordedat US$1.6billion across 15 deals in October2022.

Vivek Soni, Partner and National Leader, Private Equity Services, EY said,"October 2022 recorded US$3.3 billion in PE/VC investments, 75% lower than the investments in October 2021, which was a record month. After being on a declining trend for the past five months, PE/VC investments have recorded a sequential uptick in October 2022, a 60% increase. In terms of the number of deals, October 2022 recorded 75 deals, a 43% decline y-o-y (132 deals in October 2021).

October 2022 recorded six large deals (deals of value greater than US$100 million) aggregating US$2.2 billion, a sharp drop from the 24 large deals worth US$11.3 billion recorded in October 2021. By deal type, growth investments were the highest in terms of value in October 2022 at US$2 billion across 13 deals, which includes the ~US$1 billion investment in CitiusTech by Bain Capital.

The ~US$1 billion CitiusTech deal between Bain Capital and BPEA EQT helped prop up PE/VC exits in October 2022 to US$1.6 billion. However, on a y-o-y basis, exits were lower by 69%. Exits via secondary sale were the highest in October 2022, with four exits worth US$1.4 billion on the back of the large CitiusTech deal.

From a sector point of view, healthcare was the top sector in October 2022, with US$977 million in PE/VC investments across three deals. The second largest sector was financial services, with US$216 million recorded across 13 deals. Traditionally favourite sectors like technology and e-commerce recorded ~90% y-o-y decline in PE/VC investments.

Inflation woes, recession fears, the rising cost of capital and elevated levels of uncertainty driven by geopolitical tensions have weighed down the PE/VC activity in 2022, globally as well as locally. In India, the investment momentum, both in terms of size and number of deals, has slowed down considerably. Not surprisingly, 2022 has, so far, been the best year for credit investments, recording US$3.5 billion in PE/VC investments. Many investors are now focusing on value plays, a marked shift from last year when growth was the primary focus. While many startups have already embarked on the path of conserving cash, growth rates are expected to be negatively impacted. We are projecting an uptick in consolidation / M&A within the startup space in the coming months. On the PE side, valuations or the bid/ask spreads continue to be the main factor slowing down deal closure activity. Over the next 3-4 months, we expect this situation to improve as sellers and investors alike find equilibrium. The Indian economy continues to outperform relative to other emerging markets and while there maybe short-term volatility, the PE/VC community continues to be sanguine about India's long-term growth prospects."

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