Private equity and venture capital (PE/VC) investments were 2 per cent lower in the first quarter of 2025 than Q4 2024 in value terms, said an ICVA-EY report.
According to the report, PE/VC investments in Q1 2025 were also recorded 14 per cent lower than in Q1 2024 (US$13.7 billion in 1Q2025 versus US$15.9 billion in 1Q2024 and US$14 billion in 4Q2024). In terms of deal volume, Q1 of 2025 recorded a 20 per cent decline compared to Q1 2024 and an 11 per cent decline compared to Q4 2024 (284 deals in 2025 versus 355 deals in Q1 2024 and 319 deals in Q4 2024).
Sandeep Murthy, Managing Director, Lightbox India Advisors, said that the early-stage dealmaking will be subdued for a couple of quarters at least as investors wait to see the medium and long-term impact of the ongoing global trade wars.
“With exits via IPOs on hold on account of the correction in the capital markets, the momentum to deploy fresh capital is slowing down. Additionally, the overall slowdown in consumer spending isn’t expected to ease soon. This means that execution, strong unit economics, and controlled cash burn, which enabled our portfolio companies to weather the downturn, will continue to be top priority. The VC market is out of the funding winter, but there’s still a lot of pain up ahead,” said Murthy.
This year also saw a decline in large deals, with 32 of them worth USD 11 billion in Q1 2024 and 34 large deals in Q4 2024 valued at USD 10.1 billion. The large deals accounted for 76 per cent of the overall PE/VC investments in Q1 2025.
Notable deals include New Mountain Capital’s acquisition of Access Healthcare services for USD1.5 billion and Temasek’s purchase of a 10 per cent stake in Haldiram Snacks Food Private Limited for USD 936 million.
Vivek Soni, Partner and National Leader, Private Equity Services, EY said in the report that while a few large deals helped sustain the PE/VC investment value in 1Q2025, overall investor sentiment remains cautious on account of several macroeconomic and geopolitical factors, including policies being implemented by the current US administration, decisions on tariff, interest rate changes by central banks, and declining capital market valuations.
“As private market valuations have yet to correct meaningfully, PE/VC investors are in no rush to close deals and are rightfully monitoring evolving conditions to ensure that macro and micro risks are adequately priced in,” said Soni.
In sectoral trends, the technology sector dominated 2025 so far, witnessing a USD 3.1 billion invested through 41 deals, a significant 265 per cent rise in value compared to the USD 838 million from Q1 2024.
The infrastructure sector reached USD 2.3 billion across 13 deals, witnessing a decline of 67 per cent y-o-y. The sector recorded USD 7.1 billion in Q1 2024. The financial services sector reached USD1.6 billion with 43 deals and grew by 7 per cent in value compared to USD 1.5 billion recorded in Q1 2024.
Investment in food and agriculture grew 142 per cent, reaching USD1.2 billion in Q1 2025 compared to USD 477 million recorded in 1Q2024.