Private equity investments fall 33% to $19.6 billion in 2025 on fewer deals

valuations sought by Indian companies alongside geopolitical turmoil have weighed on the appetite of private equity (PE) investors, who have moved away from big buyout deals, driving down the amount of capital invested in the market and average deal value in 2025, Bain & Company said in a report.

In all, PE investors deployed $19.6 billion in India last year, down by about 33% year-on-year. The expanding scope of AI and its impact on traditionally PE-backed sectors such as IT and tech services also nudged investors to go slow on capital allocation.

“The number of companies that are getting evaluated is also pretty muted. Diligence has been slower than what was seen historically,” Prabhav Kashyap, partner at Bain & Company told TOI , adding that deal volumes are quite likely to take a beating this year.

Average deal value declined by about 25% y-o-y as sub-$100 million transactions made for nearly 70% of PE deal volumes last year. “Large control transactions slowed down despite available capital, given persistent valuation gaps in scaled assets and tighter leverage, creating constraints on large buyouts,” analysts at the firm said. The value of buyout deals slipped by half to $6.5 billion in 2025, said Kashyap.

Amid global macro-volatility, investors will stick to domestic sectors such as retail, financial services and manufacturing, and AI-focused capital will cover spaces such as data centres and semiconductors.