PE investments in India plunge 35% to USD 1,616 mn in April-June

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Private Equity (PE) investments in the country have fallen by 35 per cent to USD 1,616 million across 97 deals in the second quarter of calender 2012 over the same period a year ago.

In the quarter ended June 2011, PE firms had invested USD 2,477 million by way of 126 transactions, according to the second PwC MoneyTree India report.

"This (drop) was not a surprise. As the global economic environment continued to remain unstable, the sentiment in the Indian market was also glum," PwC leader, Private Equity, Sanjeev Krishan said.

Krishan further said most investors spent considerable time fretting over the tax changes proposed in the Budget as well as the falling rupee. Moreover, fresh fund raising has also been 'challenging'.

Sector-wise, the IT and IT-enabled Services (ITeS) space cornered the lion's share of the total deal kitty as it emerged as the leader in both value and volume with 38 deals worth USD 321 million in the June quarter of this year. This constituted nearly 40 per cent of the total number of deals, PwC said.

"The sector's response to the emergence of next-generation technology disruptions such as cloud computing, analytics, consumerisation of technology, social media, mobility and software product innovation and development will be watched with deep interest," PwC leader, Technology, Hari Rajagopalachari said.

In terms of value, IT and ITeS sector was followed by the energy sector, which attracted USD 290 million worth of investments in April-June 2012, while the healthcare sector clinched third rank with USD 243 million of investment, PwC said.

Meanwhile, investments in the education sector also recorded a near 100 per cent growth to USD 71 million in April-June 2012, from USD 37 million in the second quarter of calendar year 2011, as investors preferred the unregulated space such as test preparation, vocational education and pre-schools.

"With the government encouraging skill and vocational education, this trend is expected to attract more investments," the report said.