Secondary Deals Dominate Amidst Slowed PE, VC Funding in H1 2024: Report

62 per cent of the 37 deals in the $50-500 million bracket from January to June were reportedly secondary transactions or buyouts, while external primary investment rounds accounted for only 13 per cent.
Secondary Deals Dominate Amidst Slowed PE, VC Funding in H1 2024: Report

In the first half of 2024, secondary stake sales and buyouts led the way in large deals ranging from $50 million to $500 million within the start-up sector, despite an overall decline in total funding. Late-stage activities showed signs of acceleration during this period. This is as per a report by the Economic Times. 

62 per cent of the 37 deals in the $50-500 million bracket from January to June were secondary transactions or buyouts, while external primary investment rounds accounted for only 13 per cent, according to data from DC Advisory India, as per the report. 

In a secondary share sale, as per Investopedia, “the sale of shares owned by an investor to the general public on the secondary market. These are shares that were already sold by the company in an initial public offering (IPO).” 

Data from Tracxn shows that in the first half of 2023, total funding for start-ups was $5.3 billion; in the same time of 2023, it declined by 3.8 per cent to approximately $5.1 billion. 

Venture capital investors were increasingly seeking partial exits from late-stage start-ups, as reported by the Economic Times in March. This was due to rising pressure to generate returns amid a downturn in the technology market. Speaking to the Economic Times, Klaas Oskam, DC Advisory India chief executive, said, “We have seen a significant portion of what had to happen, but I think we’re still in a situation where companies that are profitable or are on a path to profitability... or are on a path to go public, will see a strong demand and strong ability to do secondaries.” 

Some of the secondary stake transactions that happened or are in the process in 2024 include the investment by Temasek and Fidelity in Lenskart, the likely investment of Peak XV Partners and Tiger Global in e-commerce platform Meesho, and more. 

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