Clean Tech firms may attract $3.5 Billion funding

Bangalore: Sajjan Jindal, President of Assocham has said that clean technology may attract an investment of $3.5 billion in the coming few years. The funding will come from private equity players and venture capitalists.

Jindal who was quoting findings from a joint paper by Assocham and Deloitte titled Indian Venture Capital-A Future Scenario, said that clean technology is an area where significant investment from private equity players (PEs) and venture capitalists (VCs) is anticipated.

There has been a steady rise in investment in Cleantech companies over the past three years. In 2007, a total of $290 million was invested in 11 clean technology deals, compared to $140 million in nine deals in 2006. As per the report, the increase is expected to continue especially now that the government initiatives and policy focus on clean technology.

In a few areas which include biotechnology, education, clean technology and life sciences, investments of over $8.5 billion are expected in the next five years. According to the paper, as regulatory obstructions are gradually disappearing, there are huge investment opportunities in these areas.

Assocham said that U.S. based Life Sciences Fund has recently injected around $20 million in a pharmaceutical company based in Hyderabad. The Indian film industry which may cross $5 billion by 2011 from its current worth of $1.8 billion is also expected to get $0.25 billion from VCs in the next five years. A global private equity firm is planning to invest approximately $200 million in education, according to the Chamber.

VC investment is undergoing some interesting transitions. Investors are backing consumer and retail firms that has benefited from the rise of the Indian middle class, as well as business services. Also, capital flowing into India is usually to expand companies.