Mumbai: Venture capital firms invested $340 million in 51 deals in India during the first six months of the current year (January-June 2008), down 6 per cent from $363 million and 55 deals during the same period last year, according to a study released by a research firm.
However, amidst a financial market turmoil in the West, more private equity funds also found its way into the Indian market, the report said.
PE firms invested about $2.8 billion in 77 Indian companies during the quarter ended June 2008, higher than the 74 deals for a total of $1.9 billion in the same quarter last year, but lower compared to 115 deals totalling $3.6 billion in the previous quarter of the current year. This takes the total investments in the first six months of 2008 to over $6.3 billion.
VC firms invested $158 million over 26 deals in April-June 2008 against $163 million in the second quarter of the previous year in 25 deals, a joint study by Venture Intelligence and the US-India Venture Capital Association said.
The latest numbers take the total investments in the first six months of 2008 to over $6.3 billion as against the $5.4 billion invested during the corresponding period in 2007.
''VC investment activity as well as amounts invested during the first half of 2008 has not been affected much by the turmoil in the global financial markets,'' Venture Intelligence CEO Arun Natarajan said.
While the stock markets nosedived, venture capital firms raised $9.1 billion in the second quarter of 2008 - three per cent more than they did during the same period a year ago.
VC firms have been able to raise money in part because they invest for the long-term while private equity funds, or those that buy or invest in later-stage companies, have been more impacted by the stock market, the study pointed out.
''While IT companies continue to account for a majority of investments, it is quite significant that the proportion of non-IT investments - both by activity and value - has now climbed up to 40 per cent," Natarajan said, adding, ''VC investments are increasingly focusing on alternative energy, media, retail and other consumer demand-led sectors.''
Idea Cellular subsidiary Aditya Birla Telecom (ABTL) raised the largest amount - $640 million, from Providence Equity Partners in Q2-08, the study found.
"The steep fall in the public markets has resulted in a marked decline in the number of PIPE, Pre-initial public offering and late stage investments during the latest quarter," said Natarajan.
"There has been a significant drying up of investments in the BFSI and engineering and construction sectors compared to last year. While power and telecom companies continue to attract large ticket investments, the positive surprise this year has been the re-emergence of healthcare and life sciences on the radar screens of PE investors," he added.
Most of the private equity investment has been in the infrastructure sector-focused companies, the study found.