India emerges as big PE hub with 86% investors planning higher allocations

Despite global economic challenges, investor optimism for India remains strong, with 86% anticipating increased allocation to the country, according to a Grant Thornton survey. Deal activity in India has surged, with 643 deals worth US$ 17.1 billion recorded in the first half of 2024. Consumer, retail, healthcare, and technology sectors are drawing significant investment. India's robust economic fundamentals, including low trade and current account deficits, substantial foreign exchange reserves, and strong GDP growth, bolster its position as a prime destination for foreign investment. The country’s leap from 11th to 5th place in global GDP rankings and status as the fifth-largest stock market further enhance its appeal.

In 2023, deal-making slowed globally but rebounded in 2024, with notable deal value and volume increases. The second quarter saw an 8% rise in deal value and a 9% increase in volume, including 22 high-value deals. Looking ahead, 48% of investors expect exceptional deal activity over the next 3 years, while 50% anticipate moderate activity. ESG considerations are becoming crucial, with 55% of investors incorporating them into evaluations. However, high valuations remain a concern for 57% of respondents. Despite these challenges, private equity exit activity is expected to improve, particularly through IPOs and strategic acquisitions. Challenges include high valuations, geopolitical tensions, market volatility, and evolving regulatory and ESG standards. CEO of Grant Thornton Bharat, Mr. Vishesh C. Chandiok, notes continued interest from sovereign wealth funds in strong, consumer-driven businesses.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.