India’s private equity (PE) and venture capital (VC) sectors are positioning themselves for a surge in dealmaking activity as subdued stock market conditions push businesses away from IPOs and towards private funding, according to a report by Reuters.
The report cites industry leaders at the Indian Venture and Alternate Capital Association (IVCA) event in Mumbai as highlighting that the ongoing market slump in 2025 stands in stark contrast to the robust IPO activity of 2024, when many investors leveraged a booming public market to exit their stakes.
The PE industry anticipates a rise in deal activity this year, particularly in financial services, IT, and healthcare, according to industry executives. A report by EY and IVCA, released on Tuesday, revealed that PE and VC investments in 2024 amounted to $56bn, down from a record $76.7bn in 2021. Despite the dip, PE-backed IPOs reached their second-highest level ever in 2024, with investors selling stakes worth $26.7bn — a 7% increase from the previous year.
“The second half of 2025 will favour buyers over sellers,” said Manish Kejriwal, founder of Kedaara Capital, adding that his firm completed just two to three deals in 2024, compared to their usual five to six.
Last year’s buoyant stock market created an ideal environment for firms to capitalise on high valuations, with Mukesh Mehta, Senior Managing Director at Blackstone, noting that IPO valuations were often double those offered in the PE market. However, since October, the worst stock market slump in 23 years has led to a significant drop in IPO activity, signalling a potential shift back to private equity markets.
“The focus over the next 12-18 months will shift toward investing and acquiring rather than exiting,” said Sumeet Narang, Founder of Samara Capital. “With many businesses and shareholders seeking liquidity, we expect deal flow to accelerate if public markets remain subdued.”
