‘Private equity funding to touch $48 bn by 2010’


New Delhi : Investment by overseas private equity funds is set to touch $48 billion in India by 2010, from $17.14 billion last year, even as the country has established an edge over China in this industry, says a new study.

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“Real estate sector is predicted to be the best beneficiary of private equity landscape in India,” says the study by the Associated Chambers of Commerce and Industry of India (Assocham).

This sector has been giving average profit margins of 35 percent and even more than 50 percent in some cases, says the Assocham study, titled “Private Equity – The Money Tree”.

“No one could have predicted that the real estate sector, which attracted nearly $1 million of private equity investment in 2005, would go on to receive $820 million in 2006,” said chamber president Venugopal N. Dhoot.

“Other promising sectors included information technology, banking and financial services, healthcare and pharmaceuticals,” he said, adding that China attracted 50 percent lower investment from this source in 2007, compared to India.

In 2006, China received $13 billion in private equity investments compared to $7 billion by India, but the latter established an edge by 2007, getting $17.14 billion, which is expected to continue for a few more years because of the potential, he said.

A total of 386 private equity deals were struck in India in 2007, mainly in real estate, infrastructure and financial services, but the information technology and outsourcing segments led the volumes charts with 66 pacts.

The real estate sector accounted for a 26-percent share in value terms, receiving $2.6 billion in 32 deals, closely followed by telecom with 21 percent share, or $2.1 billion in investment, the Assocham study says.

Specifically, some of the top deals concluded in 2007 were by Bharti Airtel with $1.096 billion from Teamsek Holdings and GMR Infrastructure with $1 billion from Deutsche Bank, Citi group and other international investors.

JP Infratech also secured $800 million worth of investment from ICICI’s venture fund, the study added.

The study also says the average size of such deals increased to $26 million in 2007 from $16 million a year ago, with estimates suggesting that as many as 150 funds, with $10 billion in their kitty, were scouting for deals in India.

Some of the major funds active in Indian market include Temasek, the investment arm of the Singapore government, and other funds like Blackstone Group, Warburg Pincus, Carlyle Group, Washington and Actis Capital.