First Quarter PE Investment Soars in India

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Apr. 20 – India saw private equity investments worth US$3.3 billion in the first three months of 2011 – most of which went in the infrastructure, IT and manufacturing sectors.

In all, 96 deals were made in the quarter with private equity deals worth about US$750 million confirmed in March, an increase of nearly 120 percent from the month before. Private equity investments in the January-March quarter were about 57 percent higher than the US$2.1 billion worth of PE investment recorded over the same period in 2010 and more than double the US$1.5 billion accrued over last three months of 2010.

India’s infrastructure sector saw two major business deals – Macquarie SBI Infrastructure Fund’s US$200 million investment in GMR Airports Holdings and 3i India Infrastructure Fund’s US$112 million investment in KMC Infratech. The GMR Airports-Macquarie SBI Infrastructure Fund deal was the biggest contract of March, 2011.

Apart from infrastructure, other prominent sectors in the first quarter of 2011 included IT, energy, construction, manufacturing and banking.

The leading PE investment during the first quarter was the roughly US$1 billion committed by Bain Capital and Singapore’s GIC to Hero Investments, the Hero group holding firm which is to takeover Honda Motors’ 26 percent stake in the listed two-wheeler maker Hero Honda. After this, the next biggest deal was Apax Partners’ US$375 million assurance to iGATE to help takeover fellow listed IT services firm Patni Computers. Apart from these investments, there were three more investments worth US$200 million — namely for the Hyderabad Airport operator GMR Airport Holdings, road projects firm Isolux Corsan India, and non-banking finance firm Indostar Capital Finance.

This is the highest investment in the first quarter of any year since 2008. This particular quarter once again proved that Indian market has recovered from the jolt caused by the Global Financial Crisis and is behaving positively towards investors and companies. It again proved that the Indian market is one of the safest options for investors looking for high returns.