According to the Bain India Private Equity (PE) Report 2011, India's was the fastest growing market for VC and PE investments in the year 2011. But things started to take a downturn after that. Private Equity firms invested US $8.9 bn over 406 deals in India during the 12 months ending December 2012, compared to the US $10.3 bn across 483 deals during the previous year.
After a year of hard knocks, things may be looking up for the Indian private equity market. Private equity deals in India were up 15% at US $4.72 bn during the first half of this year. And now American private equity fund Kohlberg Kravis Roberts & Co (KKR) is scouting for large ticket size deals in India and other Asian countries to deploy the US $6 bn raised by its pan-Asia fund. The company has said that the fund wants to focus on deals worth US $100 m and above to deploy. KKR's fund mop-up of US $6 bn is significant at a time when Asian economies are facing headwinds on economic growth and a quantitative easing withdrawal fears has knocked off value across equity markets.
The outlook for the second half of this year still holds promise as fresh investments are cheaper, thanks to the falling rupee, recovery of the US markets and active crisis control in Europe. Given the volatile economic environment in India, promoters do not have much confidence in equity as a capital raising tool for businesses. Thus, PE investments have become a good substitute for equity.
However, the Indian PE industry still has a long way to go. The number of large scale investment opportunities in India is only 500; opportunities available in China and USA are 1150 and 3500 respectively.
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