Investments hit $3.3bn in India in Q1

Private equity firms invested $3.3 billion (€2.1 billion) in 97 deals in the first quarter of 2008 in India, according to Venture Intelligence, an Indian research service focused on private equity and venture capital.

This is an increase of 22 percent on the $2.7 billion invested by private equity firms in the first quarter of 2007, but lower than the $5 billion invested in 131 deals in the last quarter. These figures do not include investments made in private equity real estate.

Arun Natarajan, chief executive officer of Venture Intelligence,  told PEO that even in the current market conditions, “we don’t expect a substantial dip in private equity investments” since a lot of fundraising has taken place in 2006 and 2007, and many private equity funds have capital that still has to be invested. Furthermore, infrastructure spending has also been healthy over the last quarter.

Natarajan said that in 2008, the “public market will dictate certain sectors” such as PIPE deals, later stage investments and pre-IPO deals, while the deal flow for the venture capital, infrastructure and a few growth stage segments “shouldn’t be affected.” He added that it would take another quarter to see whether 2008 will see more private equity capital being invested than 2007.

In the first three months of 2008, energy and telecom attracted the most private equity capital, while IT and IT-enabled services accounted for the most number of deals. Other sectors that drew in significant investments were manufacturing, healthcare and life sciences, and banking and financial services.

Last year, the country witnessed total private equity investments of about $14.2 billion in 400 deals, said Natarajan. 2006 saw deals worth $7.46 billion, and 2005 $2.2 billion.