Investing in India has been a major factor in the rise of the Indian economy in terms of Gross Domestic Product (GDP) and vice versa. Investment advisers who have been guiding investors on favorable investment prospects in India are quite optimistic. In a fairly evident trend of late, private equity (PE) and venture capital (VC) investments in India have been somewhat notable. This trend is further strengthening the confidence of all investors alike.
According to a recent report published by global consultancy Bain & Company, titled ‘India PE Report 2010’, there is renewed confidence among leading global PE investors in the Indian market. Private equity and venture capital investments are expected to reach US$17 billion (about Rs 80 billion) this year buoyed by strong economic growth in the country. According to a Venture Intelligence study, private equity firms have invested about $2.364 million in 67 deals during the quarter ending June 2010.
Funds focused on Indian equities are becoming a favorite with these global investors. Dubai-based investment firm Evolvence Capital announced its plan on July 21, 2010 to launch its third India-focused fund, The Evolvence India Fund II, with the goal of attracting a $400 million corpus of high net worth and institutional clients worldwide. Khaled al-Muhairy, a citizen of the United Arab Emirates, the Dubai-based alternative investment firm was also one of the first Gulf investment funds to embark on India as an investment destination during the pre-crisis period, as the Gulf hoped to raise surplus oil funds to invest in India.
In addition, PE players have invested more than US$300 million in companies related to food processing, agriculture-based sectors during January-June 2010, according to a report by Grant Thorton. In calendar year 2009, PE investments in these sectors were approximately $398 million versus $187 million in 2008 and $4.3 million in 2007, respectively.
All of these indicators point to the vociferous favor that India seems to have found with private equity investors. Private equity investments in India in May 2010 grew by almost 200 percent compared to the same period last year. During the month of May, the segment of financial services, materials and health were the most favored sectors for PE financing. Major PE investments during May were in companies like Avinja Properties, National Stock Exchange, Fortis Healthcare and Pegasus Assets Reconstruction by PE firms like Kohlberg Kravis Roberts & Co (KKR), Temasek Holdings and DE Shaw etc.