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Private equity firms invest USD2.8bn in India during second quarter, says study

Private equity firms invested about USD2.8bn in 77 Indian companies during the second quarter of 2008, according to a study by Chennai-based Venture Intelligence, a research service focuse

Private equity firms invested about USD2.8bn in 77 Indian companies during the second quarter of 2008, according to a study by Chennai-based Venture Intelligence, a research service focused on private equity and venture capital and a division of TSJ Media.

The amount invested during the quarter was higher than that during the same period of 2007 (which saw 74 deals totalling USD1.9bn) but significantly lower than the first quarter of this year, with 115 deals totalling USD3.6bn.

The latest numbers take total investments for the first half of 2008 to more than USD6.3bn, compared with USD5.4bn in the first six months of 2007. The largest investment reported in the second quarter was the USD640m raised by Aditya Birla Telecom, a subsidiary of listed mobile telephone services provider Idea Cellular, from Providence Equity Partners.

‘The steep fall in the public markets has resulted in a marked decline in the number of PIPE, pre-IPO and late stage investments during the latest quarter,’ says Arun Natarajan, founder and chief executive of Venture Intelligence.

‘There has been a significant drying up of investments in the banking, financial services and insurance industry and in the engineering and construction sector compared with last year. While power and telecoms companies continue to attract large ticket investments, the positive surprise this year has been the re-emergence of health care and life sciences on the radar screens of private equity investors.’

The second quarter also saw more than USD2bn raised for private equity investments in India, of which a substantial portion went into infrastructure-focused offerings from 3i and Axis Bank.

‘We continue to see strong fundraising activity for the infrastructure sector, with SBI and Macquarie launching a USD2bn fund this quarter on the heels of funds from IDFC PE and Icici Venture,’ Natarajan says.

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