India witnessed investments worth US$4.93 billion by private equity and venture capital players in the first half of this year ended June 30, 2014 as investor sentiment in the country improved after the general election results, says a report by Global consultancy EY.
As per Press Trust of India, the private equity and venture capital (PE/VC) entities pumped in US$4.93 billion across 229 deals in the first half of 2014. It is higher than the amount of US$3.63 billion invested by them in the last six months of 2013. However, investments in the January-June 2014 are lower than US$5.48 billion recorded in the first half of 2013.
According to EY report, investor sentiment has certainly improved in the last month post general elections, but it is too early to reflect in the deal data. “June 2014 recorded US$931 million invested across 46 deals,” it said. “There has been a sustained increase in investments in technology sector with 60+ investments in January-June period in 2014. Around 80 per cent of these were in the venture/early stage category,” the report stated.
The aggregate value of early-stage deals improved by 60 per cent, compared with the first half of 2013. E-commerce firms continued to attract investor interest with more than US$760 million in investments in 2014, 68 exit deals were recorded during the period.
“There is ample dry capital available for investments — and with the new government in place and improved investor sentiment, we expect greater deal activity in the second-half of 2014,” stated the report, while adding that the sentiment would also somewhat depend on the upcoming Union Budget.
The report also stated that fund raising seems to have improved with a number of India-focussed PE funds looking to raise money. Plans to raise about US$2.3 billion were announced in the first half of this year. During the same period, funds to the tune of US$1.9 billion were raised. The new government under the leadership of Prime Minister Narendra Modi is putting thrust on sectors such as infrastructure and manufacturing, hence these segments are projected to see greater PE activities in future.
According to the report, it is expected that there will be more number of exit activity through IPOs and strategic deals in the coming months. This should lead to increase in buyout deal activity.