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PEs, VCs cautiously optimistic about 2012

Private equity players and venture capitalists are cautiously optimistic about the prospects of their businesses, yet are hopeful of clinching more deals in the new year, say industry experts.

“We are cautiously optimistic about 2012 as global uncertainty still looms large. However, the number of deals is likely to be higher as valuation look attractive,” IDG Ventures vice-president Ranjith Menon said.

He also said global PE players may invest less in 2012 due to the risk aversion of foreign investors to emerging markets.

In 2011, there was an increase in private equity investments as companies found rise in cost of borrowing due to repeated rate hikes by the Reserve Bank. Even some sectors found debt flow drying up from commercial banks as financial institutions deliberately cut exposure to certain sectors fearing rising delinquency.

According to a KPMG India report on PE investments, it is estimated that PE deals marginally rose and touched USD 8.6 billion in 2011 up from USD 8.2 billion in 2010.

Similarly, according to a Grant Thorton report, the top sectors for PE investments in 2011 were realty, infrastructure, automotive, power and energy, banking and financial services and information technology, contributing to around 67 percent of the total investment during the year.

While about 22 percent of the total private equity investments were in the real state and infrastructure sectors, 13 percent was in the automotive, and 12 percent in the power and energy sector during 2011, the report added.
Source: Zee News

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