Private equity (PE) investments in India witnessed a decline for the last three months ended September though the number of deals has increased. A latest data from Venture Intelligence, a research service focused on the private equity and venture capital space, reveals during this period PEs invested about $3 billion in 116 Indian companies, which was lower compared to the same quarter last year when the investment reached at $4.2 billion being invested across 115 deals, but higher compared to the immediate previous quarter ($2.9 million across 80 deals).
Simultaneously, there is a rapid increase in venture capital deals, which has a lower deal size compared to PE investments. Venture Intelligence finds that the VC investments have touched at $20 million and deals have gone up to 50 in the September-ended quarter.
Talking to The Economic Times, Venture Intelligence CEO Arun Natarajan said, “Pre-IPO placements and buyouts completely dried up during the latest quarter. While late-stage investments accounted for a third of the deals during Q3, the share of venture capital investments rose to 40 percent in volume terms.”
“PEs tend to divest faster, but that will not happen now. Also, exits for PEs are a problem because IPOs are on the back burner in the current market situation. But for VCs, exits are mostly through mergers and acquisitions. The incidence of M&A in a down market is higher, as valuations become attractive,” opined Sudhir Sethi, IDG Ventures India Chairman and Managing Director.
Natarajan also said that the existing guys in the venture capital pace have accelerated their pace of investment and newer funds such as Ojas Ventures and Inventus Capital Partners are becoming more active.
“It was too early to predict if private equity firms, which traditionally make late-stage investments, are making VC kind of deals. This would further lead to a reduction in investments, in terms of volume,” he added.
JP Morgan's $ 250 million input in caf� coffee Day was the largest investment in Q3 of 2008. Overall, IT and ITeS industry managed to get the maximum investment by both value and volume during the period.
Source: Silicon India