PE funds invest 23% more in 2011

“The amount of uninvested capital lying with PE funds and the increasingly attractive valuations available — including in the listed companies segment — points to a turnaround in the quarters ahead,” says Arun Natarajan, the chief executive officer at Venture Intelligence, a data provider on private equity and mergers and acquisitions. Last year, PE funds invested $8.18 billion in 362 deals, data from Venture Intelligence shows.

PE funds invested nearly 17% or $1.7 billion to purchase stakes in information technology and IT-enabled services companies in 137 deals, followed by investments in power producers and in manufacturing sector. They invested 15% in listed firms.

Fund managers are cautious to invest in India now. “The data may be skewed because of a few large deals,” says Gulpreet Kohli, the managing director at private equity firm ChrysCapital Investment Advisors India, which manages $2 billion across five funds. “So I don’t think anything has really changed because the sentiment continues to be cautious even though valuations have become attractive.”

“Smart PE firms are still cautious of investments,” he added. India may lose its investment flavour to other emerging markets as policy inaction and spate of scandals hit government. “Brazil and China may gain a little more traction than India in 2012, but exit situation will improve through more exits via mergers and acquisitions and strategic

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