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PE investments slips 35 per cent

The gloom on the economic front both domestically and abroad has resulted in private equity investments in the country falling 35 per cent during the April-June quarter, a report has said.
Private equity funds invested USD 1,616 million in 97 deals during the quarter, which is 35 per cent lower in value terms and 23 per cent down when compared with number of deals, the report by consulting major PwC has found.
“As the global economic environment continued to remain unstable, the sentiment in the Indian market was also glum. Most investors spent considerable time fretting over the tax changes proposed in the budget as well as the falling Indian rupee,” its leader for PE, Sanjeev Krishnan, said.
A host of factors like slowing growth, depreciating currency, volatility in equity markets, reduction in demand from the developed world, elevated interest rates and a sense of “policy paralysis” have dented the economic sentiment domestically in the recent past.
Many analysts and research houses are now saying the country’s growth will slip below the six per cent mark in FY13, last seen in the early 2000s.
Information technology and IT-enabled services sector took the lead during the quarter with 38 deals and investments of USD 321 million, the report says.
The sector’s average deal size also went up to USD 8 million from the earlier USD 7 million, it said.
The energy sector witnessed a fall in activity during the quarter, with investments coming down to USD 290 million from the year ago’s USD 324 million while deals were down to 5 from the earlier 11.
Among the sectors which has attracted the most attention is education, which has witnessed an almost 100 per cent growth in deal activity at USD 71 million, the report said.
On the exits – where the private equity funds make money – front, there has been a drop of 89 per cent by deal value, with only 12 deals collectively worth USD 108 million happening, it said.
Source: Financial Express

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