Private equity investments double to $8 b in 2010

After a volatile three-year period, private equity (PE) investment in 2010 has reverted to the peak levels witnessed in 2006.

While PE investment in India doubled to $8 billion over 325 deals in India in 2010 over last year, it was more than the peak levels witnessed in 2006 during which there was a record investment of $7.4 billion in 358 investments, according to analysis by Venture Intelligence, a research service focused on Private Equity and M&A activity.

The figures include venture capital (VC) investments and exclude PE investments in real estate.

The exciting feature of 2010 was on the exits side where activity vaulted to an all-time high levels with 121 transactions, including 24 via IPOs, said Mr Arun Natarajan, CEO of Venture Intelligence.

With 25 investments during 2010, IFC – the World Bank's private investment arm – continued to remain the most active PE investor in India during 2010. IFC was especially active in the energy and BFSI industries. Sequoia Capital India with 15 investments, including eight in IT & ITES companies, during the year was the second most active investor, the study says.

PE firms obtained exit routes for their investments in a record 121 companies during 2010, including 24 via IPOs; 2009 had witnessed 66 liquidity events, including seven via IPOs.

Including IPOs, each type of exit witnessed record high volumes in 2010.

The total value of M&A transactions providing exits to PE-investors during 2010 was around $5.3 billion. These included 36 sales via public markets, 30 strategic sales, 17 secondary transactions (involving sale of shares by one PE firm to another) and 13 buybacks (by either the company or its promoters), the study said.