Private equity (PE) funds will continue to remain preferred choice for capital growth in India with Indian industries receiving investments valued at around $10 billion from PE deals by the end of 2010 according to the Confederation of Indian Industries' (CII) latest report jointly released by global auditing firm KPMG.
"India has a very vibrant private equity industry with over $ 32.5 billion invested across more than 1,500 PE deals from January, 2006, till date. As per the industry estimates, PE investments would be in the range of $ 9-10 billion in the year ending December 31, 2010," says the report.
The report adds that PE funding would be expected to provide capital to fund much-needed infrastructure projects to support 7 to 8 per cent gross domestic product (GDP) growth in the country. The report says the country needs about $1.3 trillion investment over the next three years to sustain a GDP growth of 7 to 9 per cent with PE investments contributing $60-100 billion.
"It is estimated that currently there are over 137 domestic and 135 foreign PE fund managers operating in India. Over the last three years, PE investments were the equivalent of 33 per cent to 72 per cent of the total equity raised from primary markets," the report adds.
According to Gopal Srinivasan, chairman, CII national committee on PE, and chairman and managing director (CMD), TVS Capital Funds Ltd, "The PE industry provided over $50 billion of much- needed venture, growth and other forms of capital for the growth of Indian companies." He added that had collaborated with PE firms in India so far and have excelled in several key areas like IT/ITES, telecommunication, retail, infrastructure and manufacturing.
He added that it was estimated however, that investments from PE and VC (venture capitals) needed to be increased three-fold from a trailing level of $10 billion annually to $30 billion.