Elephant outruns the Dragon
India is emerging as one of the most favoured destinations for private equity investments in the world. In the first quarter of the calendar year 2008, it attracted $4 billion (Rs 16,000 crore) in PE investments, almost double the amount received in the corresponding period of the previous year. China, meanwhile, received $570 million (Rs 2,280 crore) in PE investments this year.
PE Magnet India is drawing bucketfuls of dollars.
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Till the end of 2006, China had maintained a lead over India. But the tide turned in India’s favour in 2007. It attracted $17.14 billion (Rs 68,560 crore) of PE investments compared to $8.3 billion (Rs 33,200 crore) for China. Says Rishi Sahai, Director, IndusView Advisors: “PE investors prefer India to China as it is less regulated and has easier entry and exit norms.”
The Indian real estate and infrastructure sector has been the major beneficiary of PE inflows this year, accounting for a 28 per cent share ($1.12 billion or Rs 4,480 crore).
The power sector is next, with a 13 per cent share ($520 million or Rs 2,080 crore).
The banking & finance and telecom sectors are tied at the third place with 8.7 per cent share ($340 million or Rs 1,360 crore) each. Says Sahai: “It’s encouraging that infrastructure is getting PE investments as the equity and debt markets are not structurally suited to provide the large capital infusion that is required for the sector.”
— Rishi Joshi
