India experienced a 4% decline in the first half of FY25
Private equity investments in India experienced a 4% decline in the first half of FY25, primarily due to a significant drop in the office sector. The total number of deals decreased from 24 in the same period last year to just 17 this year.
Shobhit Agarwal, Managing Director and CEO of ANAROCK Capital, attributed this downturn to reduced activity among foreign investors, who have historically driven investments in the office market. This decline is largely influenced by global factors, including ongoing geopolitical tensions and rising interest rates. Despite this, overall foreign investment in Indian real estate remained stable, largely thanks to a landmark deal involving Reliance Retail’s warehousing assets, where the Abu Dhabi Investment Authority (ADIA) and KKR invested heavily.
In H1 FY25, the total amount of private equity investments stood at US$ 2.3 billion, down slightly from US$ 2.4 billion in H1 FY24. However, the average deal size saw a notable increase of 23%, rising from US$ 104 million to US$ 128 million. This surge was significantly driven by the major transaction involving Reliance, which accounted for a remarkable 67% of total investments during this period.
Logistic sector captured the 67 percent of PE
The standout deal in this landscape was the acquisition of warehouses by ADIA and KKR from Reliance Logistics & Warehouse Holdings, valued at US$ 1.54 billion. This deal highlights a growing interest in the industrial and logistics sector, which captured an impressive 67% of total private equity investments in H1 FY25, effectively overshadowing the office and residential sectors, both of which attracted 17%.
The office sector has seen a staggering 79% decline in private equity investments, while the industrial and logistics sector experienced an extraordinary 378% increase compared to the same timeframe last year. Additionally, the residential sector’s share of investments rose to 17%, up from 8% in the previous year, driven by a vibrant market activity, although stronger pre-sales and increased participation from public sector banks may lessen reliance on private equity financing.
Despite global challenges, the commercial office market displayed resilience, with demand supported by Global Capital Centres (GCCs) and flexible workspace solutions. Industry experts believe that easing interest rates could further bolster investor confidence in this segment.
Hyderabad on top in private equity
Geographically, Hyderabad emerged as a leading destination for private equity, attracting US$ 284 million in investments. In contrast, Mumbai’s share significantly declined, dropping from 23% to just 9%. The top 10 private equity deals accounted for 97% of the total investment value in H1 FY25, compared to 93% in H1 FY24, underscoring the concentration of capital in fewer, larger transactions.
