Indian PE investments slump by 87 per cent

In a sharp reflection of the credit squeeze in the Indian market, private equity investments have slumped by as much as 87 per cent year on year, and 56 per cent sequentially, according to data released by research firm Venture Intelligence.

Private equity investments in India totalled a mere $526 million across 36 deals in the January-March quarter. Private equity inflow was $3.9 billion a year ago across 133 deals, said the Venure Intelligence, which tracks private equity and mergers & acquisitions in the Indian market.

The investments were also lower compared with the $1.2 billion in 63 deals in the October-December quarter. Also, venture capital inflow decelerated in the quarter ended March 31 to $44 million across nine deals, compared with $226 million across 33 deals a year earlier.

Venture capital investments totalled $91 million across 18 deals in the October-December quarter. Both the deal pipeline and the size of deals have shrunk.

Venture Intelligence founder and CEO Arun Natarajan attributed the drop to risk aversion, particularly among limited partners. LPs are institutions or individuals that give capital to PE funds. They could be pension funds, insurance companies or asset management firms.

Among the largest investments during the first quarter of 2009 was the $50 million raised by media and entertainment firm Nimbus Communications from its existing investors and the $47.5 million raised by start-up broadband ISP services provider Tikona Digital Networks.