India PE investments cool as big buyouts slow, says report – PRESS Insider

Private equity (PE) investments in India fell 33% to $19.6 billion in 2025, as global funds pulled back from large buyouts amid high valuation expectations, tighter financing conditions and a more cautious view of exits, according to Bain and Company and the Indian Venture and Alternate Capital Association (IVCA).

The decline marked a sharp reset for India’s PE market. Total private equity and venture capital investments fell 17% to about $36 billion, from $42.9 billion in 2024, while deal volumes rose about 10% to 1,675 transactions.

The decline was concentrated in traditional PE.

Bain said PE investments dropped from $29.2 billion in 2024 to $19.6 billion in 2025, while venture capital and growth investments rose 18% to $16.2 billion. Average deal size across PE and VC fell to $23.1 million from $30.4 million, with the average PE deal size falling more sharply to about $118 million from $209 million.

The report said India’s PE market has entered a “disciplined phase,” with investors moving away from large-cap control transactions and toward smaller, more selective bets. Deals under $100 million accounted for about 70% of PE volumes in 2025, compared with about 50% in 2024, as capital shifted to mid-sized assets where funds see better valuations and room for buy-and-build strategies.

The slowdown in Indian PE contrasted with a global rebound. Bain said global buyout deal activity rose about 44% in 2025, helped by interest-rate cuts, aging dry powder and large public-to-private transactions in North America.

Asia-Pacific deal value fell about 10%, while India’s decline was steeper, although its share of regional PE-VC investment remained broadly stable at about 20%.

Bain identified four pressures behind the slowdown in large-cap PE deals: persistent valuation gaps, tighter leverage, slower capital recycling from aging assets and global capital allocation trade-offs.

Sellers remained anchored to peak multiples from three to four years ago, while buyers underwrote more moderate growth and exit assumptions, widening bid-ask spreads and delaying or shelving transactions.

Higher global rates and tighter credit conditions also reduced the leverage available for buyouts, forcing sponsors to contribute more equity and making large deals harder to justify.

At the same time, delayed exits and extended holding periods pushed general partners toward smaller, lower-risk deployments instead of concentrated megadeals.

Buyout activity was hit especially hard. Bain said overall buyout deal value declined about 55% over 2024 and 2025, led by declines in IT and IT-enabled services, real estate and infrastructure, and healthcare.

The mix of buyout transactions also shifted, with fewer control deals and a higher share of minority investments.

Sector preferences changed with the market mood. Capital moved toward businesses tied more closely to domestic demand and policy support, rather than export-facing or globally exposed sectors.

Consumer and retail investment rose about 2.6 times year on year, while manufacturing and industrials investment increased about 60%, supported by consumption recovery, supply chain realignment and production-linked incentive schemes.

By contrast, IT and IT-enabled services declined about 30%, reflecting softer global technology spending, longer deal cycles and concerns over AI disruption to traditional services models. Healthcare also moderated after earlier strength.

Large transactions still occurred, but they were more selective.

The top 2025 deals included Alpha Wave and Temasek’s investment in Haldiram, Blackstone’s investment in AGS Health, TPG’s $1 billion investment in Hypervault AI, and ADIA and Warburg Pincus’s investment in IDFC First Bank.

Several of the largest transactions were in consumer, financial services, IT/ITeS, manufacturing and infrastructure.

The report said family-owned businesses and carve-outs from Indian conglomerates remained an important source of PE buyout opportunities, accounting for 40% to 45% of buyout deal volume.

Such transactions included investments linked to Siemens Gamesa Wind, Theobroma, Saurashtra Fuels, Pravesha and TVS Industrial and Logistics Park.

Exits were more stable than investments. PE-VC exit value rose about 3% to roughly $34 billion in 2025, even as exit volumes fell about 30%.

Public markets remained the largest exit route, but their share weakened as funds increasingly used strategic sales, buybacks and partial exits to return capital.

Bain said public market exits still accounted for about 40% of exit value, despite a roughly 30% decline from 2024.

Strategic sales rose to about 21% of exit value from 16%, reflecting sector consolidation and stronger appetite among corporate buyers for inorganic growth.

Fundraising, however, remained healthy. Bain said global funds were still structurally committed to India, citing KKR’s potential deployment of up to $20 billion over the next decade and Temasek’s India exposure of about $50 billion.

Domestic capital formation also strengthened, with ChrysCapital raising about $2.2 billion for its Fund X, described by Bain as the largest domestic PE fund to date.

The outlook for 2026 remains constructive but selective. Bain said moderating interest rates, stable inflation, resilient consumption, government capital spending and manufacturing policy support should continue to underpin investor interest.

But geopolitical tensions, currency volatility, tighter cross-border liquidity and AI-led disruption are likely to keep capital deployment cautious.