Private Equity (PE) investments in India have grown to $10 billion so far this year from $2 billion in 2005, and has emerged as the top destination in Asia (excluding Japan) surpassing China that recorded $8.3 billion in investments so far.

According to a statement from IndusView Advisors, a cross-border advisory firm, the Indian real estate and infrastructure sectors have been the key contributor to this increasing trend as it emerged favourite with 50% share in value of all PE investments with an inflow of about $5 billion in 52 deals this year.

Real estate has emerged as the favourite segment with 26% share in value of all PE investments having received $2.6 billion in 32 deals, and was closely followed by telecommunications with 21% share in value of all investments at $2.1 billion.

"India's private equity market can expand four-fold using deal value as a percent of gross domestic product, and maintain the top slot ahead of China, its nearest competing economy. The infrastructure sector will provide the necessary edge." said Bundeep Singh Rangar, chairman, IndusView.

India’s PE investments as a percentage of GDP at 1% vis-à-vis western countries like the US at 2.3% and the UK at 3.3% best describe the emergence of private equity as an asset class in India with a low of room for growth. China received $13 billion in PE investments in 2006 when compared with $7 billion in India during the same period. The equation has changed since then with India well in the lead this year.

"Indian infrastructure’s favourable investment flavour is its predictable investment climate and a strong entrepreneurial culture as the sector is characterised by developers across small pockets in the country’s diverse geography with immense scope of development and large land holdings." Rangar added.

- Business Standard (NOv5, 2007)
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