Investments by private equity (PE) and venture capital (VC) funds have declined by 42 per cent year-on-year (Y-o-Y) to $4 billion in November, a report said on Friday.

However, compared to the preceding month of October, investments have increased by 18 per cent. A report by industry lobby IVCA and EY, said, adding this is the second sequential rise in monthly investments.

"A significant gap in the bid/ask spreads was the main factor slowing down deal closure activity in 2Q (April-June) and 3Q 22 (July-September) as a result of which large deals got delayed and companies raised smaller rounds to minimise dilution," EY's partner Vivek Soni said.

By the number of deals, November's 88 transactions were 15 per cent lower than the year-ago period and 13 per cent higher than the preceding October.

When looked at from a deal type perspective, buyouts were the highest in terms of value in November 2022 at $1.8 billion across four deals compared to $1.5 billion invested in five deals in November 2021, the report said.

From a sectoral perspective, infrastructure was at the top in November 2022, driven by investments in clean energy, with $1.6 billion in PE/VC investments across six deals, it said. 

Soni said Fortune 500 companies' need for supply chain resilience has made a strong case for Indian manufacturing, and large global asset managers seem to favour India as they revise their emerging market allocations, which portends well for investment activity in the future. 

Rising global recession concerns, China's changing policy towards COVID and the geo-political climate remain the top three risks, he said. 

November 2022 recorded 29 exits worth $1.8 billion compared to $3.1 billion in November 2021 across 21 deals and $1.6 billion through 15 such deals in October 2022.

It recorded a total fundraising of $1.9 billion compared to $610 million raised in November 2021, with Kotak Investment Advisors' $500 million for its 13th Real estate fund being the largest.