August recorded the highest exits in 2022 in terms of value by private equity (PE) and venture capital (VC) firms, at $3.1 billion across 25 deals, according to a report.
The report also noted that secondary and strategic exits too saw some marquee deals being executed. In total, such deals recorded $584 million and US$687 million in aggregate value, respectively.
In the startup ecosystem too, several investors are making strategic exits. For instance, Sequoia Capital India trimmed its stake in Zomato while Uber Technologies exited the food delivery platform in August. The latter sold its entire 7.8% stake through a block deal at Rs 50.44 a share.
According to the monthly report IVCA-EY, the sharp rise in the value of exit deals comes on the back of a few large open market exits including KKR selling its 28% stake in Max Health for $1.2 billion and Blackstone exiting 14% stake in Sona BLW for $509 million. In July, PE/VC exits recorded $322 million across nine deals.
The month, however, recorded an 80% drop in PE/VC investments to $2.2 billion compared to $9.2 billion recorded during the corresponding period last year.
Overall, all deal segments recorded sharp declines on a year-on-year basis, in the range of 70%-90%, primarily due to the absence of large deals, the report noted.
Startup investments were the highest in August 2022, at $953 million across 60 deals. However, even such investments saw a 69% year-on-year decline from $3.1 billion in August 2021 across 94 deals.
“After remaining resilient for almost seven months amid global headwinds of tightening liquidity and rising inflation, Indian PE, VC investment flows for the first time have shown tepidness, reaching a 19-month low,” said Vivek Soni, partner and national leader, private equity services, EY said.
“Investors are being more circumspect in making investment decisions and taking longer to close deals as the competitive pressures witnessed in the previous year have ebbed and the cost of capital has gone up,” Soni added.
In August 2022, the decline in investments was visible across sectors. However, the healthcare sector bucked the trend, recording a year-on-year increase 485% in PE/VC investments.
In the past few years, the healthcare sector is receiving a lot of attention and investments from PE/VC funds. Since 2017, the sector has recorded close to $9.5 billion in investments, the report said. On the other hand, exits in the healthcare sector recorded deals close to $5.3 billion since 2017.