Private Equity Firms Invest big in Indian Companies

Date:   Wednesday , September 01, 2010

The year 2010 has witnessed Private Equity (PE) firms investing big money in the Indian companies. So far, PE firms have invested over $5 billion in Indian companies this year. The amount invested is way more than what was invested in the whole of the previous year.

According to data compiled by deal space research firm VCCEdge, the first seven months of 2010 saw private equity deals valued at $5.1 billion, as compared to $4.3 billion in entire 2009. Between January and July 2010, as many as 220 companies have received funding from PE enterprises.

However, the PE firms made an exit from 73 other companies. PE firms generally exit from their investment through buyback of shares by promoters, open market transactions, merger and acquisitions and public offers.

The PE investment in India has witnessed a rise to nearly 190 percent at $776 million in July, 2010. From July 16, 2009 to July 25, 2010, there was a growth in the number of deals and the value of the dealings also doubled to $26 million in July 2010 from $13 million in the same month last year.

The VCCEdge’s report on monthly PE deals says that Financials, Consumer discretionary and Utilities were the most targeted sectors during the month of July. The month also saw worth $169 million exit from 11 companies. The biggest deal cracked during the month was the $179 million investment in IDFC by Actis, an investment arm of Malaysian sovereign wealth fund Khazanah, followed by a $110 million investment by Xander Real Estate Partners in Panchshil Realty.

At this rate, the PE investments look to soar further in the year. However, the number of exits in the first two quarters this year has almost doubled from that of the year before, which saw only 38 exits in the first two quarters.