PE/VC Investments Dip in 2025 Amid Volatility, Start-Ups and FinTech Show Resilience

Entrepreneur

31-07-2025

Private equity and venture capital investments in India increased by 11 per cent in 1H2025 compared to 2H2024 in value terms, according to a new EY-IVCA report.
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Private equity and venture capital investments in India increased by 11 per cent in 1H2025 compared to 2H2024 in value terms, according to a new EY-IVCA report.
In the first half of 2025, PE/VC investments totaled USD 26.4 billion, marking a 19 per cent decline year-on-year (USD 32.4 billion in 1H2024), but an 11 per cent increase over the second half of 2024 (USD 23.8 billion). This represents 47 per cent of the total investment value recorded in 2024. Deal activity also slowed, with 593 deals in the first half of 2025 (1H2025), down 16 per cent from 704 in the first of of 2024 and 9 per cent from 649 in 2H2024.
Pure-play investments reached USD 18.3 billion in 1H2025, 3 per cent lower than 1H2024 (USD 18.9 billion) but 13 per cent higher than 2H2024 (USD 16.2 billion), accounting for 69 per cent of overall PE/VC activity.
Vivek Soni, Partner and National Leader, Private Equity Services, EY India, said, "PE/VC investment activity has largely remained subdued in the first half of 2025, characterized by month-on-month volatility and a notable decline in both deal value and volume. Investor sentiment continues to be weighed down by a combination of macroeconomic factors and heightened geopolitical headwinds."
Real Estate and Infrastructure sectors attracted USD 8.1 billion in 1H2025, reflecting a 40 per cent drop from 1H2024 (USD 13.5 billion) but a 6 per cent rise from 2H2024 (USD 7.6 billion).
First half of saw 60 large deals aggregating USD 19.4 billion, a 15 per cent decrease from USD 22.7 billion across 69 deals in 1H2024. However, this marked a 26 per cent increase in value over 2H2024 (USD 15.4 billion across 57 deals). Large deals made up 73 per cent of total PE/VC investments in 1H2025. The largest deal was New Mountain Capital's USD 1.5 billion investment in Access Healthcare Services.
Start-ups led investment activity with USD 6.8 billion across 366 deals, up 41 per cent by value from 1H2024 (USD 4.8 billion across 323 deals) and 32 per cent from 2H2024 (USD 5.2 billion across 322 deals).
Financial services have consistently attracted the highest pure-play PE/VC investments over the last decade, receiving USD 75.4 billion since 2015. Notably, 61 per cent of this total has come in the past five years (since 2020).
"The upcoming quarterly corporate earnings announcements will be a key indicator for market direction. While early signals such as strong GST collections, the recent rate cut by the Reserve Bank of India, and the IPO pipeline are encouraging, the outlook is cautiously optimistic given the concerns on earnings growth and the US-India FTA discussions that are stretching timelines. We expect that deal activity could gain momentum in the second half of the year as earnings performance and US-India FTA is behind us," said Soni.
FinTech has emerged as the most favored sub-sector since 2020, drawing USD 16.5 billion, 36 per cent of total PE/VC funding since 2019. The sector continues to scale profitably, driven by rising incomes and the increasing formalization of savings. Asset and wealth management, in particular, is at a pivotal growth stage and is expected to expand exponentially over the coming decade.