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PE investments see upward trend

Private equity investments in India seem to be recovering, with aggregate...

With still nearly four months to go, the PE/VC investments in 2014 till date stand at $7.80 billion. (Reuters) With still nearly four months to go, the PE/VC investments in 2014 till date stand at $7.80 billion. (Reuters)

Private equity investments in India seem to be recovering, with aggregate PE and venture capital investments likely to surpass last years’ investment of $10 billion, even as next year might witness inflows of over $12-13 billion that may be the highest since 2008 (which saw investments of $14.1 billion).

With still nearly four months to go, the PE/VC investments in 2014 till date stand at $7.80 billion, which is the highest when compared with corresponding period figures for the past two years.

The revival in business sentiment on the back of a stable government, slight improvement in macro-economic indicators, along with buoyant equity markets paving way for exits has led to resumption in selective fund raising and higher investments that might cross $10 billion in 2014, believe experts.

Girish Nadkarni, managing director at Motilal Oswal Investment Advisors, says there is currently a lot of PE interest towards India, with over a hundred global funds flush with money looking to invest in India. He says it’s quite possible to see PE investments exceed recent years’ high of around $10 billion.

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Darius Pandole, partner, New Silk Route Advisors, says the overall business confidence has significantly improved over the last few months. “PE investors who are present in India are actively evaluating transactions across sectors, and new investors who are currently not present in India are examining strategies to enter the Indian market,” said Pandole.

Raja Lahiri, partner, Grant Thornton India, believes while renewed market sentiments post the formation of the government has helped, the improvement in exit outlook that has been the key focus for PE funds would lead to higher investments in 2014.

Exits have been a major concern for the PE industry, which had pumped in over $95 billion in the past 10 years even as they took back just around $31 billion in the past six years. The year so far has witnessed exits valued at around $2.4 billion, majorly through the public market exit route. With IPO markets reviving, experts see the exit environment improving further, helping PE firms to deploy more money.

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Bhavesh A Shah, MD, investment banking at JM Financial Institutional Securities, feels while 2014 might see higher investments, 2015 would be the turning point. “We believe 2015 will see higher activity, in both investments and exits than previous years,” he said.

JM Trivedi, head, Actis south Asia, also believes that it will take some more time for promoters to actually start investing money in projects.

Nitin Shrivastava | THe Financial Express

First published on: 21-09-2014 at 01:44 IST
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