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PE investments in India drop over 50 percent

By SiliconIndia | Wednesday, 11 March 2009, 23:51 Hrs | 3 Comments

PE investments in India drop over 50 percent

Chennai: As investors tighten their investment plans due to the unpromising nature of the businesses, India witnessed a decline in the PE investment by 50 percent between April 2008 and February 2009. PE investment in the country fell to $6.6 billion (around

33,000 crore) from $14.3 billion (

70, 000 crore) last year. The decline was visible in terms of the number of deals also, which dropped 33 percent to 292 from 436, reported Business Standard.

Some of the big-ticket investments during the period include a $428- million investment by Providence in Adiya Birla Telecom in May 2008, followed by $225 million by GIC in Reid & Taylor India in June 2008, $190 million by a PE consortium led by IDFC in Quippo Telecom Infrastructure in August 2008, $175 million by Goldman Sachs in Mahindra & Mahindra in May and $174 million by Masdar in WinWind in September 2008.

Healthcare and life sciences sector lost investments more than others. The sector reported a decline of 75 percent to $201 million (

1, 000 crore) from $809 million (around Rs 4,000 crore), a year ago. The number of deals also dropped by 51 per cent to 20 as compared to 41. BFSI (banking, financial services and insurance) sector reported a 71 per cent drop in investments at $862 million (around Rs 4,300 crore) as compared to $3,031 million (around Rs 15,100 crore), a year ago.

"Except for media and entertainment which reported a 96 per cent growth in value terms, all industries have reported a drop in investments," said Arun Natarajan, Founder and CEO, Venture Intelligence, a Chennai-based PE research firm.

According to Natarajan, the lack of clarity in the ability to raise new funds, and instructions from Limited Partners (LPs - investors in PE funds) to go slow on new investments, has made PE investors very cautious. He expects that the investment activity will pick up slowly through the year but doesn't expect 2009 to be much better than 2008.

Industry sources believe that PE firms are likely to stay away from some industries like real estate due to the sliding realty prices and slowing sales which is scaring them away from one of the hottest investment destinations of recent years. As India's growth is set to slow to around 7 percent during the current fiscal, private equity players see fewer opportunities emerging in the near term.

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Reader's comments(3)

1: how can anyone expect the investments to go high during recession? get real.. its no use complaining.

Posted by:minish - 12 Mar, 2009

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Posted by:hotels book - 16 Aug, 2010

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