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India’s rapidly growing economy is attracting private capital players amid a soft global market.
Over the past decade and a half, private capital assets under management ( AuM ) have more than tripled, reaching a record US$124.3 billion by the end of 2023, alternative assets data provider Preqin says in a new report.
Harsha Narayan, lead author of the Preqin report, says: “India's economy is experiencing rapid growth, fuelled by strong GDP expansion, favourable demographics, large-scale infrastructure investment, and economic reforms. As a result, Preqin is seeing increasing numbers of eager global private capital players participating in this market, as India-focused private capital assets under management grows at a significant pace."
Source: Preqin, data as of June 2024
Private debt is the fastest-growing asset class in the country, with AuM higher than in any other individual market in Asia-Pacific. From just below US$14 billion by the end of 2022, private debt AuM grew to nearly US$18 billion by the end of last year, up 29%, with assets expected to surpass this level this year.
Alongside the need for flexible financing, the introduction of regulatory reforms such as the passage of the Insolvency and Bankruptcy Code has also increased investor confidence in the country’s private debt market.
Venture capital, meanwhile, remains the largest private capital asset class in India. At the end of 2023, India-focused venture capital AuM amounted to almost US$45 billion and accounted for 36% of all India-focused private capital AuM.
A total of 961 India-focused venture capital deals valued at nearly US$14 billion were recorded last year, and in the first six months of 2024, deal volume and value reached 560 and about US$6 billion, respectively. Moreover, aggregate venture capital fund raising is on track to match 2023 levels, from US$2 billion in 2023 to US$1bn by June 2024.
India-focused private equity remains resilient while the country’s public markets have been outperforming most major economies in recent years. Exit volumes reached 85 last year and 46 in the first half of 2024.
Aggregate fund raising is on course to surpass last year’s total, with over US$1 billion raised by June 2024, compared with just below US$2 billion in 2023.
Meanwhile, government spending is supporting the infrastructure segment, with the 2024 budget targeting capital expenditure of US$133 billion. India-focused infrastructure AuM grew from over US$8 billion by end-2022 to almost US$9 billion by the end of last year. There were 93 deals worth over US$14 billion in 2023, and 77 deals valued at US$9.5 billion by June 2024.
In real estate, India-focused AuM grew from US$20 billion in 2022 to over US$21 billion by the end of 2023, accounting for 8% of total for Asia-Pacific.
