Private equity firms invest $2.1bn in India in second quarter

The amount invested during the latest quarter was approximately five times higher than that during the same period last year, which witnessed 40 deals totalling $407m. During the January-March 2006 quarter private equity firms invested $1,384m across 69 investments.

Total investments by private equity investors during the first six months of 2006 reached approximately $3.5bn, compared to $2.2bn invested in the 12 months of 2005.

With 17 deals worth about $200m, manufacturing overtook the IT and IT-enabled services as the favourite industry among the private equity investor community in the second quarter of 2006. Engineering and construction companies emerged as the third most favourite industry attracting $372m across 13 deals. Other industries that witnessed significant interest from private equity investors during the quarter included banking and financial services and food and beverages.

'While private equity interest in manufacturing was growing rapidly right through 2005, this is the first quarter in which investments in this industry has actually overtaken the number of deals in IT,' said Arun Natarajan of Venture Intelligence India.

Natarajan continued, 'Given that the main competition to private equity in India over the last 18 months have been the public markets - something which caused several deals to fall through due to mismatch in valuation expectations - the correction of the is likely to encourage some private equity investors, who chose to not to participate in the highly competitive late stage segment over the last few months, to become more active now.'

Venture Intelligence India is a division of Chennai, India-based TSJ Media.

Copyright © 2006 AltAssets