Update for the community:
Syed Sajid Hussain followed doc: Integrate with VNET for outbound requests in configurating VNET for APIM instance and enabled private endpoints for event grid as described in the doc. Performed nslookup from the VNET for the event grid point and it pointed to the private endpoint correctly but gateway logs from APIM showed public IP.
The configuration was not saved correctly in APIM, and we are investigating to find the cause of the issue.
Resolution:
Syed Sajid Hussain mitigated the issue by removing VNET/Subnet from the APIM and then added it back again. After that, it started working as expected.
Glad to hear that your issue was resolved and appreciate you sharing it with the community.