Private equity (PE) investments in India witnessed a significant decline in 2025, with total capital deployed falling to $19.6 billion, a drop of approximately 33% year-on-year, according to a report by Bain & Company. The slowdown was driven by high valuations sought by Indian companies and global geopolitical turmoil, which dampened investor appetite for large buyout deals.
Decline in Deal Value and Volume
The average deal value declined by about 25% year-on-year, as transactions under $100 million accounted for nearly 70% of PE deal volumes last year. Large control transactions slowed down despite available capital, due to persistent valuation gaps in scaled assets and tighter leverage, which created constraints on large buyouts. The value of buyout deals halved to $6.5 billion in 2025, said Prabhav Kashyap, partner at Bain & Company.
Impact of AI and Geopolitical Factors
The expanding scope of artificial intelligence and its impact on traditionally PE-backed sectors such as IT and tech services also prompted investors to slow capital allocation. Kashyap noted that the number of companies being evaluated is muted, and diligence processes have been slower than historically seen. Deal volumes are likely to take a further hit this year.
Investor Focus on Domestic Sectors
Amid global macro-volatility, investors are expected to stick to domestic sectors such as retail, financial services, and manufacturing. AI-focused capital will cover spaces like data centres and semiconductors. The report suggests that while large buyouts remain constrained, opportunities in these resilient sectors may attract steady investment.
