PE funding down 23% at $10.8 bn

The global liquidity crisis and slump in the Indian stock markets have clearly made a dent, and a significant one, to private equity inflow into the country.

According to a Venture Intelligence report, investments by PE firms fell 23% in 2008 to $10.8 billion.

Arun Natarajan, founder and chief executive officer of Venture Intelligence, said, “This is the first time since 2002 that private equity investments in India witnessed a Y-o-Y  decline.”

Compared with 439 PE deals in 2007, there were only 399 transactions in 2008. Information technology and IT-enabled services were most preferred sectors, registering 107 deals in the year.

Among cities leading the fray, Mumbai-based companies retained the top slot with 105 PE investments worth $3.2 billion. It was followed by Delhi/National Capital Region with 74 investments of $3 billion and Bangalore with 64 investments of about $1.3 billion.

Bharat Banka, MD & CEO of Aditya Birla Private Equity (ABPE), said deal flow was never an issue in 2008. “We ourselves have evaluated over 100 deals and all of them were very good companies. However, what was not really in place from a private equity player’s point of view is valuation. And that was a major issue.”

The PE firm has already committed $100 million across three investments.