Private Equity Investment Slows Down in India’s Q1 FY24, Excluding a Major Deal by GIC and Brookfield REIT

During the first quarter of FY24, private equity (PE) investment in India experienced a subdued trend, with a notable exception of a large deal involving GIC and Brookfield REIT.

The total investment volume reached $1.9 billion, marking a marginal 5 percent decline compared to the same period last year. However, a closer examination of the latest data from Anarock reveals that the majority of PE activity remained lackluster, aside from a single significant transaction.

Key markets like Delhi-NCR and Bengaluru, which have historically been hubs of activity, saw no PE investments during this period. In Q1 FY23, Delhi-NCR accounted for 47 percent of PE investments. Mumbai, among the leading commercial markets, witnessed some PE activity with deals worth over $400 million, comprising 22 percent of the overall PE investments during the quarter.

Of the total $1.9 billion invested, 94 percent was in equity and the remaining amount in debt. In the previous year’s period, equity constituted 80 percent, with debt making up 20 percent of investments. Additionally, while domestic investors contributed 10 percent of the funds in Q1 FY23, their share decreased to 6 percent this year as foreign investors provided 94 percent of the funds.

The $1.4 billion deal between Brookfield Asset Management’s PE fund and a consortium led by Brookfield India Real Estate Trust REIT and GIC constituted a significant portion, accounting for 74 percent of the overall PE investments during the April-June quarter. Consequently, the average deal size increased by 92 percent year-on-year to $192 million in Q1 FY24.

Shobhit Agarwal, MD & CEO of Anarock Capital, explained, “Excluding this deal, private equity activity remained subdued owing to a high-interest rate environment and global uncertainties. PE transactions in Indian real estate are, in any case, tilted towards equity investments in office assets by foreign investors. The single large deal between the consortium of GIC and Brookfield REIT with Brookfield AMC has further skewed the mix during the quarter.”

Gagan Randev, Executive Director, India, Sotheby’s International Realty, attributed the slight decline in PE investment during the April-June quarter to temporary slowdowns and disruptions in the global economy. He stated, “Investments in office assets have been severely affected in North America by the sharp rise in interest rates, and this has resulted in an upheaval in the markets there.”

However, Randev anticipates a rebound in the upcoming quarter, expressing optimism about an increase in PE investment. He cited India’s robust economic growth, rising demand for Grade A office spaces, a sharp rebound in retail, and strong warehousing demand post-Covid as indicators of a positive outlook.

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