As the global credit crisis casts its spell on the private equity (PE) firms in India, fund-raising has witnessed a significant dip. India-dedicated firms raised $1.8 billion through five funds in the second quarter of this financial year, down 60% compared to the same period a year ago when 11 funds worth $4.5 billion were raised by PE firms.
The total size of the funds raised during 2007 calendar year stood at $8.4 billion, according to a study by Venture Intelligence, a firm that tracks private equity and venture capital in India.
“For first time since 2003, we’ve seen the fund-raising index actually decline. The steep fall in the stock markets brought down the overall investment sentiments in India and dried up deal activity in the last quarter,” said Venture Intelligence CEO Arun Natarajan. Investments from PE firms started pouring into India over the last five years. Before 2003, there were very few PE funds active in India and barring few exceptions most of the deals were in the nature of venture capital.
The July-September’08 period saw Sequoia Capital raising its second growth fund worth $750 million targeting mid-sized companies. Other firms that closed new funds during the period included Nexus India Capital and Gaja Capital.
Source: Economic Times