India Slips In VC/PE Investment Rank

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New Delhi/Hyderabad Feb 23: : While India attracted 31.1 per cent more venture capital/private equity (VC/PE) investment in 2003, the country has slipped to number five in 2003 from number three in 2002 among top five Asian countries in attracting VC/PE investments.

India attracted $774 million in the calendar 2003 from $590 million in the previous year, according to Indian Venture Capital Association (IVCA).

However, the growth in India was also substantially less as compared to growth in Asia. Quoting figures from a recent report conducted by Asian Venture Capital Journal (AVCJ), IVCA chairman Saurabh Srivastava said, “the investment in Asia through VC/PE has increased by 92 per cent in 2003 over 2002.” A total of $17.5 billion was invested in Asia in 2003 in the form of VC/PE fund.

For 2002, India was ranked third among other Asian countries after Japan and South Korea. In 2003, Japan was leading the list of countries in Asia in terms of receiving investments with a total of $7.7 billion followed by South Korea (3.1 billion), Australia ($2.1 billion), China ($1.25 billion) and India.

The India dedicated funds invested more in 2003 as compared to investments through global funds in 2002.

Giving a reason for this, Mr Srivastava said, “the increase in investment by India as compared to global funds has happened in 2003 as the India-specific opportunity has become all the more attractive and lucrative. Another reason for the rise in the India-specific fund investment is the increase in trend in syndication in funding.”

The proportion of India dedicated funds to global funds of the total investments in India was 40:60 in 2003 from 30:70 in 2002.

Interestingly, a long-time favourite of investors, information technology sector no longer seems to attract venture capitalists and private equity (VC/PE) partners are more keen to diversify into non-IT sectors.

According to National Association of Software and Service Companies (Nasscom)’s Strategic Review 2004, of the total money invested during 2003 by VC/PE partners, more than two-thirds were made in non-IT sectors such as pharma, banking, media, automobile, infrastructure, foods, to name a few.