Foreign investors are increasingly active in India, suggesting a shift in risk perception in the country.
Deals that included overseas capital accounted for more than two-thirds of PE deals in India in Q4 last year, according to PitchBook’s Q4 2024 India Market Snapshot.
With 41 deals recorded during the three-month period, it also represents the fifth consecutive quarter where foreign participation in overall deal count has grown.
Q4 saw the lowest deal value last year, dropping from $6.5 billion in Q1 to $4 billion. Deal count remained relatively flat, dropping from 66 in Q3 to 61 in Q4.
The biggest deal involving foreign capital last year was the $2.5 billion buyout of telecommunications operator ATC India by GIC, British Columbia Investment Management and Brookfield, which was recorded in September.
PAG also agreed to acquire Manjushree Technopack, a plastic packaging producer, for $970 million in November.
One key factor that has boosted non-domestic investor confidence is the relatively stable currency brought by a more proactive stance from the Reserve Bank of India and the strengthening of the country’s foreign exchange reserves in recent years.
“The rupee has historically been volatile, and sharp depreciations eroded USD-denominated returns. The increased stability of the currency helps mitigate fears of extreme currency fluctuations, making long-term investments in India more attractive to global PE firms,” said Melanie Tng, a Pitchbook private capital analyst.
Investors are also drawn by India’s fast-growing economy and healthy demographics, as well as regulatory reforms that relaxed foreign investment restrictions in key sectors.
The Reserve Bank of India is expected to lower interest rates further after its rate cut in February—the first cut since 2020. This could fuel investments in yield-focused sectors such as infrastructure and real estate. Businesses that depend on a debt-driven expansion model will also benefit.
Featured image by Dimitri Otis/Getty Images
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