‘Emerging markets to lure,India to fade’

Over the next 12 mths,PE investors are expected to be less bullish about India.

The global private equity (PE) investors’ appetite for emerging markets is likely to continue in the next 12 months,but they are less bullish about India than they were a year ago,says a survey.

According to a study by research firm Preqin,just 12 per cent of PE investors survey named India,specifically,as presenting attractive opportunities,a much lower proportion than in our December 2010 study,when India was named by 35 per cent of investors.

Asia,however,remains a hot favourite market for PE investors,as 60 per cent of investors view Asia as “attractive”,followed by North America,which was favoured by 42 per cent of respondents.

Besides,within the emerging market,Asia remains the most cited region,named by 43 per cent of investors,the survey said,adding that 33 per cent specifically named China as presenting attractive opportunities.

Emerging markets continue to attract strong interest from investors. Seventy-six per cent of investors will consider investing in emerging markets,an increase of six percentage points from December 2010,when 70 per cent of investors were open to investing in emerging markets,the survey said.

According to the study,99 per cent of investors who invest in emerging markets expect to maintain or increase their allocation to emerging markets over the next 12 months.

However,according to a separate survey by consultancy firm Grant Thornton India,domestic companies are favouring the PE route to raise funds as the country’s initial public offerings market has ‘almost dead’ for over a year now.

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In 2011,as many as 373 deals were closed in the country with an overall deal value of USD 8.75 billion,as against 253 deals worth USD 6.23 billion in 2010.

Grant Thornton said PE funds are sitting on a dedicated fund pile of over USD 20 billion,which can result in an increase in PE fund flows this calendar year.

“With over USD 20 billion of dry powder yet to be invested in the country and growing acceptance of PEs,the deal street is expected to gain momentum in terms of volume and value this year,” Grant Thornton report had said.

The Preqin report added that global PE fund-raising is likely to see an improvement this year as investors are bullish about the asset class with 73 per cent investors are planning to make new commitments in the coming 12 months.

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Though as many as 70 per cent of investors surveyed said they are not averse to any particular region,investors are avoiding certain regions,the highest proportion named Europe as a region they would not look to invest in the coming 12 months.