Investors Seek India-Focused Private Equity
Investor interest in private equity funds has been curbed due to the illiquidity associated with the asset class and the apparent lack of deal flow in many markets. That, however, has not been the case in India This year, over $5 billion has been invested in India, which is more than was invested throughout all of 2009.1 Private equity investment has increased as the availability of deals has increased. When comparing the number of deals from July 2009 with the number from July 2010, the increase is roughly 56 percent.2
When evaluating private equity opportunities within a country, investors often consider the ability of a fund to exit its investments in its portfolio companies. Some need to know that funds can exit investments profitably when the time is right. To date this year, there have been 77 exits by private equity firms, which points to the maturity of the Indian market.3
As analysts at BHA have spoken to private equity investors, they have also noted a seemingly increasing interest in India-dedicated funds. In the second quarter of 2010, less than 8.5 percent of private equity investors had an interest in India. After the first month of the third quarter, however, 12 percent of investors had shifted their focus to the country. An investor that consults for endowments and pension plans in the United States and abroad, reiterated his clients’ interest in Asia and specifically India, citing it as an area with huge potential in the coming years.
India’s recent surge in deal flow has drawn the attention of fund managers looking to take advantage of the ever growing country, while the recent profits funds have generated upon exiting their investments have increased investors’ awareness. With more than $5 billion already invested this year, there is no sign that investors will be backing out of the country anytime soon.
1,2,3 India Private Equity, “PE investment in Indian firms crosses $5 bn for 2010,” August 5, 2010, http://www.indiape.com/blog/_archives/2010/8/5/4596847.html