New Delhi, May 14: Traditional sectors like healthcare and advanced manufacturing are poised to attract substantial investments in 2024. According to the India Private Equity Report by Bain and Company, a global management consulting firm, investors are showing strong support for established business models with significant long-term growth potential.
In 2023, sectors such as healthcare and advanced manufacturing demonstrated resilience and gained market share, with these sectors accounting for 75 percent of the total investments. Healthcare investments surged to a record high of USD 5.5 billion in 2023, driven by a threefold increase in deals compared to 2022. Major transactions involved multi-specialty hospitals, including Manipal Hospital’s significant growth of 2.7 times over FY2021-23 and acquisitions of Columbia Asia and Vikram Hospitals.
The report predicts robust deal activity in healthcare and advanced manufacturing across various sub-segments in 2024. Healthcare is expected to witness continued investment in multi-specialty and single-specialty hospitals, along with multiple-scale pharma and med-tech deals.
Most traditional sectors remained resilient as investors maintained interest in mature businesses with strong long-term growth prospects. Five megadeals in this segment attracted total investments exceeding USD 1 billion and included entities like Manipal Hospitals, Reliance Retail, HDFC Credila, Adani Power, and Avaada Group. The consumer retail, healthcare, and energy sectors experienced robust growth of over 10 percent driven by these investments.
Advanced manufacturing investments achieved a 20 percent compound annual growth rate (CAGR) over 2021-23, propelled by supply chain diversification, government incentives like the Production Linked Incentive scheme, and an influx of scale assets into the market. Significant investments were made in electric vehicle OEMs, with EV penetration increasing to over 6 percent in 2023 from 1 percent in 2019.
In 2024, increased investments are expected in packaging, electronics, and EV sectors within advanced manufacturing. Electronics manufacturing is expanding rapidly with government support, and EV penetration is on the rise in India.
However, investments in the IT/ITeS sector declined, with a 65 percent decrease due to elevated valuations and subdued demand in end markets. Similarly, investments in SaaS and new-age tech sectors declined by 60 percent as investors focused more on profitability and sustainable business models.
The fintech sector also experienced a decline in 2023 due to regulatory constraints, rising non-performing assets (NPAs) in small-ticket loans, and uncertainty regarding the path to profitability.
Consumer tech deal activity continued to decline as investors exercised caution and pulled back from large investments in businesses with unproven economics. (Agencies)