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According to a statement from IndusView Advisors, a corporate advisory firm, India had first achieved the milestone of surpassing China in attracting PE investments towards the end of the second quarter of the calendar year 2007 when it had grossed $10 billion compared with China’s $8 billion. China received $13 billion in private equity investments in 2006 compared with $7 billion in India during the same period. The equation has changed since then, with India well in the lead now. The Indian real estate and infrastructure sector has again been the key contributor to this increasing trend this year so far as it emerged favourite with 28 per cent share in value of all private equity investments at $1.12 billion, followed by power sector having received about 13 per cent share of the pie at $520 million so far this year. Banking & Finance and Telecom sectors tied for the third most favorable sectors for investments with 8.7 per cent of the deals at more than $340 million each. Globally, real estate and infrastructure fundraising by international real estate private equity funds, has been brisk, with as much as $130 billion raised over the last two years, according to estimates. A large percentage of these funds raised are focused outside of the US for investing in emerging markets like India and China. “With the economic downturn in developed economies intensifying and the application of capital becoming dearer compounding the pressures on expected Return on Investments (RoIs); PE firms are finding their way in to safer investment havens, that is, emerging markets which have decoupled from the developed markets.” says Bundeep Singh Rangar, chairman of IndusView. “India continues to enjoy a favourable investment flavour among investors due to liberal economic initiatives on the part of the government when compared with China which is much regulated.” added Rangar Over the past few year, the Indian government has responded to an urgent demand for new infrastructure, announcing 9 per cent of the country’s GDP will be spent on infrastructure by 2012, presenting an unprecedented investment opportunity. Renewed interest in the Indian infrastructure sector has seen fresh fund-raising of up to $8 billion in the pipeline this year with financial entities such as State Bank of India, Australia-based Macquarie Capital Group, the UK-based private equity firm 3i Group, the US-based Blackstone Group, among others, chipping in. “Emergence of the non-tech sectors as favourites for investment is symbolic of the realisation of the need to develop world class infrastructure to accelerate growth in the Indian economy,” said Rishi Sahai, board director, IndusView. A significant share of international real estate funds will find their way into the Indian real-estate and infrastructure market, which has the capacity to absorb as much as $500 billion over the next five years, according to government estimates. |
Source: Business Standard