Private Equity/ Venture Capital investment grew 24.72% from $453 million in January 2010 to $565 million in 2011even as the deal count remains unchanged with 35 deals as against 34 deals in January 2010 , according to the latest data released by by PE/VC research firm VCCedge.
Interestingly January ?11 saw a majority of small-sized deals (under $25 million) accounting for 68.5% of deal volume. Vikram Hosangady, executive director, Transaction Services, KPMG India, confirms, ??Small deals are getting traction from the strategics as large international players want to get their feet wet in the Indian market as they begin to increase their footprint in emerging markets.??
Utilities at $39 million and Financials at $118 million were the hottest sectors for investment in January ?11. Following suit were deals in Information Technology at $95 million, Consumer Discretionary at $ 84 million and Industrials $65 million. In all, the top five sectors accounted for more than 88.67% of total private equity deal value during the month. In terms of deal activity, with 10 deals Consumer Discretionary accounted for 28.57% of the total deal volume. Next in line was Industrials with 6 deals, closely followed by Financials, Information Technology and Utilities, with 4 deals each.
Experts point out that 2011 will see a heightened activity both on the exit and deal volume side since India is the market to be in, a lot of PE players will like to enter it at a premium leading to much activity in the space. Hosangady adds, ??2011 will see increased activity from the US and Europe as companies in these markets see improved business cycles. PE activity may increase in the near future especially given the volatility in the capital markets which may result in companies scouting for private equity rather than tap the equity markets. PE exits will continue to be driven by the lifecycle of the investments and increased attention by global and Indian strategics.??
