Private equity (PE) investments in India were down by 14.7 per cent to $8.9 billion in 2012, mainly because of delays in fund deployment by the PE firms. It was a challenging business environment for PE firms to raise funds, says a report.
PE firms invested $8.9 billion over 406 deals in India during 2012 compared with $10.4 billion across 483 deals the previous year, according to an analysis by Venture Intelligence, a Chennai-based research service focused on private company transactions and financials.
These figures, which include VC investments and exclude PE investments in real estate, take the total investments by PE firms over the past five years to about $41.4 billion across 2,036 transactions.
More judicious
The data reveal that PE investments in the last quarter of the year declined by over 32 per cent to about $1 billion (across 82 deals) compared with $1.5 billion invested (across 121 deals) in the same quarter in 2011 and $3.9 billion invested (across 108 deals) in the immediate previous quarter.
“PE managers are being more judicious and taking a longer period to deploy their funds,” commented K.E.C. Raja Kumar, Founder & CEO of Bangalore-based PE firm Ascent Capital.
The fact that the environment has continued to be challenging for new fund raising has also contributed to the investment slowdown. “Limited Partners’ interest in Indian PE funds continues to be lukewarm. This would change provided the current rally in public markets results in an exit realisation for PE funds,” Kumar said in the report.
IT, ITeS top
With 162 investments worth about $3.2 billion, information technology and IT-enabled services companies topped in terms of both investment value and volume during 2012. The $150-million fourth-round investment raised by e-commerce company Flipkart was the next largest after the two mega BPO deals in the IT industry.
Powered by four investments worth $100 million or more in the hospitals segment (Manipal Health Systems, Care Hospitals, DM Healthcare and Vasan Eye), the Healthcare and Life sciences industry absorbed $1.2 billion across 48 deals.
Led by Warburg Pincus’ $145-million buyout of listed NBFC firm Future Capital, the BFSI industry was the third favourite, accounting for $890 million across 43 deals. Energy companies — powered by the interest in wind power development in first half 2012 — came in next, attracting $478 million across 20 investments, the report said.