Private Equity and Venture Capital firms capitalize on stock market surge, generating approximately $3 billion through exits within a single month.
In a notable development, private equity (PE) and venture capital (VC) firms withdrew nearly $3 billion from their Mumbai-listed portfolio companies in June 2021. This significant withdrawal, according to industry reports, is primarily due to a decline in PE/VC investments and exits in the preceding months, reflecting overall market caution and valuation gaps [1][3][4].
The reduced appetite for new investments, as indicated by the 68% year-on-year drop in PE/VC investments in May 2025, may have prompted firms to liquidate or reduce existing holdings [1][3][4]. Furthermore, a high volume of exits through open market sales in May 2025 suggests that firms were monetizing stakes to return capital or redeploy elsewhere [1][3].
Industry experts attribute the market valuation challenges to a "bid-ask spread" between sellers’ and buyers’ valuation expectations that has not yet converged, limiting new funding and encouraging exits to realize gains or limit risks [4]. Economic and macro pressures, such as ongoing global uncertainties and geopolitical tensions, have also contributed to a cautious investment environment [4].
Despite the withdrawal, there are positive signs in the Indian economy. Domestic factors like robust GST collections and rupee strength offer some optimism [4]. Notable developments include Carlyle Africa spinout Alterra Capital exiting a legacy asset, and Prosus and SoftBank-backed Meesho filing confidentially for an IPO [5].
The withdrawal occurred from a variety of PE and VC firms, with TPG-backed Fibe appointing Vimal Saboo as CEO of its NBFC arm [6]. However, the specific companies from which funds were withdrawn were not mentioned in the article. It is worth noting that this withdrawal was facilitated by a stock market rally that pushed India's benchmark indexes near record highs on June 30 [2].
The data for this information is from an undisclosed source. The impact of this withdrawal on the Mumbai stock market and the Indian economy is yet to be fully understood and will be a topic of interest for further analysis.
[1] PE/VC investments plummet in May 2025: DataLab by Inc42 [2] Stock market rally pushes indexes near record highs: Business Standard [3] PE/VC exits surge in May 2025: VCCircle [4] Valuation challenges, economic pressures fuel PE/VC withdrawal: MoneyControl [5] Carlyle Africa spinout exits legacy asset, Meesho files for IPO: Economic Times [6] TPG-backed Fibe appoints Vimal Saboo as CEO: LiveMint
Investing in new opportunities may have become less appealing for finance firms due to the 68% decrease in private equity (PE) and venture capital (VC) investments in May 2025, as suggested by the data from DataLab by Inc42. Inresponse, some firms might have chosen to sell their existing stakes to return capital or redeploy it elsewhere, as evidenced by the high volume of exits through open market sales in May 2025, according to VCCircle.
