New Delhi, December 21
Private equity (PE) investment activity in India slowed in 2025, reflecting broader global uncertainty linked to geopolitical developments and evolving trade policies, according to KPMG's Pulse of Private Equity Q3'25 report.
As of the end of the third quarter of 2025, PE investments in India amounted to USD 14.9 billion across 217 deals, compared with USD 26.3 billion across 289 deals recorded in full-year 2024. KPMG noted that if the pace of activity observed through Q3 continues, 2025 could become the weakest year for private equity investment in India since 2019.
"Should current trends continue, 2025 could be the slowest year for PE investment since 2019 and the slowest for deal volume since 2020," the report read.
The report attributed the slowdown largely to uncertainty around US tariff policies and geopolitical tensions, which have increased difficulty in forecasting risks and returns.
Despite the moderation in investment activity, the report stated that private equity investor interest in India remains intact.
Over the 2020-2024 period, India consistently attracted more than USD 20 billion in PE investments annually, with deal volumes peaking in 2024.
KPMG highlighted India's macroeconomic fundamentals, demographic profile, domestic consumption growth and capital market performance as factors supporting continued investor engagement.
The KPMG report observed that many global private equity firms operating in India are increasingly adopting a "business builder" approach.
This includes establishing local offices and teams, pursuing majority or controlling stakes, and actively participating in operational and strategic decision-making at portfolio companies.
"Global PE investors have put a lot of work into building their market presence in India. Many have recognised the importance of having a local team, in a local office, with the ability to build local relationships -- and have set up shop directly in the country in order to make investments and provide active support to their portfolio companies. To date, PE investment in India has been largely a controlled deal market, with PE investors preferring to buy majority stakes in businesses so that they can better unlock value and drive business growth. Many PE investors see their role as being business builders in India rather than simply financial investors," the report read.
KPMG also noted the maturation of India's private equity ecosystem, reflected in the increasing size of India-focused funds.
Fundraises exceeding USD 1 billion, which were relatively uncommon in earlier years, have become more frequent, indicating deeper institutional participation in the market.
From a sectoral perspective, the report identified technology, healthcare, life sciences and financial services as continued areas of private equity interest.
Within technology, investor focus has evolved from traditional IT services toward software-as-a-service (SaaS) models.
Interest has also expanded into manufacturing segments, including AI-enabled manufacturing.
In financial services, activity has spanned banking, non-banking finance, insurance, wealth management and fintech. Looking ahead, KPMG noted that the current slowdown in private equity investment activity is expected to persist until greater clarity emerges on global trade and tariff policies.
The report also noted that increased competition for high-quality assets could influence valuations as market conditions stabilise.
- ANI
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