Private equity firms and promoters have been actively monetising their stakes in listed companies in 2024, with a surge in sell-downs via block and bulk deals totaling around $74 billion so far, which is a 60% increase from the previous year. This trend is attributed to good market rallies prompting PEs and promoters to take profits and reinvest in other opportunities.
According to VLA Ambala, co-founder of Stock Market Today, many PE players are now looking at reinvesting their proceeds in early-stage start-ups where they have the potential to earn multiples, signaling a shift from traditional investments in mature companies with limited growth opportunities.
The market saw a peak in deal activity in the early part of the year, with over ₹1 lakh crore worth of deals in June. However, deal flow fluctuated throughout the year, influenced by factors such as FPI outflows and speculations around the impact of Donald Trump becoming the next US President. November witnessed the lowest block deals at ₹25,669 crore.
Some of the largest deals in 2024 involved promoters divesting stakes, including BAT Plc selling its stake in its Indian arm for ₹17,485 crore, Vodafone Plc selling its stake in Indus Towers for ₹15,637 crore, and Blackstone selling 15% stake in Mphasis for ₹6,736 crore.
The strong market rally in 2024, with the Nifty Midcap index rising by 25% and the Nifty 50 by 18%, has been a key driver for profit booking and fund rotation activities. Despite high volume selling by FPIs towards the end of the year, the trend of sell-downs remained strong, averaging over ₹52,000 crore per month.
Looking ahead to 2025, it is anticipated that the trend of profit booking and fund rotation will continue, with investors likely to focus on lucrative start-ups and small-cap options. This shift towards early-stage investments reflects a growing interest in higher potential returns and diversification strategies among PE players and promoters in the Indian market.
