Private Equity in India to touch $48 bln by 2010: Assocham

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New Delhi, Jan 30 (UNI) Private Equity (PE) overseas firms' investment in the country is likely to touch 48 billion dollar in the next two years, an industry chamber said today.

At present, over 400 such firms are operating in the domestic market which will further scale up by another 69 or 70 by 2010.

As per the paper by the Assocham, the real estate sector is predicted to be the best beneficiary of the PE landscape in the country which will give them profit margins, varying anywhere between 35 per cent or even 50 per cent.

The country last year attracted the highest PE investments, the valuation for which is estimated at 17.14 billion dollar from emerging economy including China.

As compared to India, China attracted less than 50 per cent of PE investment in 2007, the estimates for which are at 8.3 billion dollars.

Interestingly in 2006, China received 13 billion dollar in PE investments compare to seven billion in India.

This differential is indicative of the fact that the country has already established an edge over China as far as PE Investments are concerned and its hegemony will continue for another few more years because of prospects to absorb such investments will brighten by much more vigorous pace, Assocham President Venugopal N Dhoot said while releasing the findings of the paper.

Mr Dhoot said, ''no one could have predicted that real estate sector, which attracted in nearly one million dollar of PE in 2005, will go on to receive 820 million dollar in 2006. Other promising sectors included information technology, banking and financial services, health care and pharmaceuticals.'' A total of 386 BE happened in 2007, mainly in real estate, infrastructure and financial services space. The IT and ITeS segments led the charts in terms of volumes, accounting for 66 deals.

Some of the top deals concluded in 2007 include Teamsek Holdings 1,096 million dollar in Bharati Airtel, Deutsche Bank, Citi group and other international investors, 1,000 million dollar in GMR infrastructure and ICICI venture Funds 800 million dollar in JP infratech.

Real estate emerged as the favourate segment with 26 per cent share in all private equity investment in value term, receiving 2.6 billion dollar in 32 deals, closely followed by Telecom with 21 per cent share, investment touching 2.1 billion dollar, the chamber said.

According to the paper, PE has emerged as an attractive midpoint along the financial spectrum for Indian companies seeking to raise capital. This is evident from growth of the PE market in India every year, from US 1.1 billion dollar invested in 60 deals in 2004 to two billion dollar in 124 deals in 2005.

Cumulatively, from April 2006 to February 2007, an amount of 11.89 billion dollar has come in equity.

This marks a growth of 176 per cent in dollar terms in FDI inflows into India cumulatively.

The average PE ticket size has increased to 26 million dollar, from 16 million dollar a year ago.

PE today comprises the largest component of Foreign Direct Investment (FDI) in the country with FDI inflows in equity only in February 2007 amounted to 698 million dollar, compared to only 127 million dollar in February 2006, a whopping increase of 450 per cent.


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