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Praveen Gurwani
Private equity investors fall for India Inc
It was an action packed first three quarters for private equity investors in India .
There were close to 246 deals aggregating $5.4 billion in the first nine months, much higher than the 169 deals worth $2.2 billion in 2005. According to a PricewaterhouseCoopers report on private equity investment in India, the focus on the country was due to expansion plans of Indian corporates to meet growing domestic demand and the opportunity to list gains through pre-IPO placements.
“Indian companies have already reached a stage where they have already created certain amount of value and infrastructure for themselves. Now, they need that capital to scale up. That explains the interest in Indian companies. Also, in the past one year, the returns on investments in Indian companies have been very high, thus making it a very attractive destination,” Sanjeev Krishan, ED, PricewaterhouseCoopers, said.
The past two years have seen a gamut of funds entering India such as Blackstone, 3i, Helion Ventures, New Enterprise Associates and Matrix Partners.
Even Indian players like IDFC Private Equity, ICICI Ventures, Reliance Private Equity and IL&FS have got a strong foothold.
However, these funds have been facing stiff competition from hedge funds and pre-IPO funds such as Farallon Capital, New Vernon, Soros Funds Management and Octant Capital.
A further sign of maturity is in the investments being mostly in late stage funding and private investment in public enterprises (PIPE) compared to the traditional seed or early stage funding of venture capitalists in other markets such as the US and Europe,
“It’s not that venture funding at an early stage is not happening, but in the last one year, we have noticed more investments in the late stages,” he added.
Investments are also being made across a wide variety of sectors, including automotive ancillaries, real estate, infrastructure and pharmaceuticals, indicating a gradual shift in focus from information technology.
“In the coming one year, we will see more investments in sectors like retail, real estate, healthcare, infrastructure and auto. But the shift will be gradual,” added Krishan.
However, due to the bull run on the bourses and the spate of successful IPOs, there have been an increase in valuations in the Indian market.
:tea:
It was an action packed first three quarters for private equity investors in India .
There were close to 246 deals aggregating $5.4 billion in the first nine months, much higher than the 169 deals worth $2.2 billion in 2005. According to a PricewaterhouseCoopers report on private equity investment in India, the focus on the country was due to expansion plans of Indian corporates to meet growing domestic demand and the opportunity to list gains through pre-IPO placements.
“Indian companies have already reached a stage where they have already created certain amount of value and infrastructure for themselves. Now, they need that capital to scale up. That explains the interest in Indian companies. Also, in the past one year, the returns on investments in Indian companies have been very high, thus making it a very attractive destination,” Sanjeev Krishan, ED, PricewaterhouseCoopers, said.
The past two years have seen a gamut of funds entering India such as Blackstone, 3i, Helion Ventures, New Enterprise Associates and Matrix Partners.
Even Indian players like IDFC Private Equity, ICICI Ventures, Reliance Private Equity and IL&FS have got a strong foothold.
However, these funds have been facing stiff competition from hedge funds and pre-IPO funds such as Farallon Capital, New Vernon, Soros Funds Management and Octant Capital.
A further sign of maturity is in the investments being mostly in late stage funding and private investment in public enterprises (PIPE) compared to the traditional seed or early stage funding of venture capitalists in other markets such as the US and Europe,
“It’s not that venture funding at an early stage is not happening, but in the last one year, we have noticed more investments in the late stages,” he added.
Investments are also being made across a wide variety of sectors, including automotive ancillaries, real estate, infrastructure and pharmaceuticals, indicating a gradual shift in focus from information technology.
“In the coming one year, we will see more investments in sectors like retail, real estate, healthcare, infrastructure and auto. But the shift will be gradual,” added Krishan.
However, due to the bull run on the bourses and the spate of successful IPOs, there have been an increase in valuations in the Indian market.
:tea: