India overtakes China in PE funds

NEW DELHI: Private equity (PE) investment in India has overtaken China this year to emerge as the biggest Asian destination (excluding Japan) for PE funds.

Investments have crossed $10 billion between January-October as against $8.3 billion recorded in China in the same period, says a report from investment advisory firm IndusView.

China received $13 billion worth of PE investments in 2006 compared to $7 billion in India during the same period. The equation has, however, changed since then with India leading the Asian charts this year.

Real estate and infrastructure emerged as the top sectors attracting PE investment in India this year accounting for half of the total PE money flowing into India through 52 deals.

Out of this, real estate received $2.6 billion through 32 deals. Real estate as a sector was closely followed by telecom with $ 2.1 billion worth of PE investments.

Global fund raising for real estate and infrastructure by international real estate private equity funds is estimated at $72 billion in 2006 with another $50 billion raised in the first eight months of 2007. A large percentage of these funds raised are focused outside of the US for investing in emerging markets such as India and China, according to the advisory firm.

India’s PE investments as a percentage of the country’s GDP stands at 1% vis-à-vis other developed markets such as the US (2.3%) and the UK (3.3%) and has much room to grow, according to IndusView.