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Indian PE doubled in size last year

The Indian private equity market approximately doubled in size during 2005, both in terms of number and value of completed deals.

India saw its private equity market double in size last year, according to figures from Dealtracker, a division of global accounting firm Grant Thornton.

The report found that private equity investments totalled $2 billion (€1.7 billion) in 124 deals in 2005, compared with $1.1 billion in 60 transactions during the previous year.

The average value of these transactions rose 85 percent in 2005, with ten completed deals worth more than $50 million.

The most popular sector for investors in India during last year was pharma/healthcare/biotech, which accounted for $374 million of investment in 19 deals, giving it an 18.4 percent market share. IT accounted for 12 percent of total deal value, automotive 9.6 percent, and banking/financial services 9.1 percent.

The IT sector recorded the most deals in 2005 (22), followed respectively by pharma/healthcare/biotech, banking/financial services, textiles/apparel, and media/entertainment.

The report noted that significant developments in Indian private equity over the last year included: a focus on larger and more mature deals including PIPE deals; several funds looking for buyouts/change of ownership situations; an increase in international funds setting up operations in India; and greater fund allocations to India.

Harish HV, head of M&A at Dealtracker, indicated in a statement that he saw a further increase in activity ahead: “The private equity sector is expected to see more activity, with funds like Draper [Fisher Jurvetson] planning to invest over $200 million in India over the next five years and Oak Investment Partners planning to start a $200 million specialised retail fund in India.”

The Indian M&A market as a whole saw greatly increased activity last year, with $13 billion invested in 245 deals in the first 11 months of 2005 – compared with $9.5 billion in 237 deals in the whole of 2004.