Eat this – In Q1 2008, the PE investments in India surpassed that of China!!.
The country witnessed private equity investments to the tune of four billion dollars in the first three months of this year – out of which ~ 30% investment accounted for infrastructure and real estate sector.
In Q1 2008, infrastructure and real estate accounted for 30% of PE investments. Energy, telecom, media/entertainment, financial services, and manufacturing followed. Between them, these six sectors mentioned here accounted for 90% of all PE investments over the last three months.
Basic areas like infrastructure, real estate, energy, telecom get the largest share of investments; following by second order needs like financial services, logistics and manufacturing. Media/entertainment, Internet, retail/consumer are perhaps third order needs, in a country like India.
About $ 5billion of new funds have been announced in April so far, of which around 70% of the dedicated money is for real estate/infrastructure. Some of the other money is sector agnostic, like Azim Premji’s newly announced $1billion fund.
At the same time, lot of PE deals have fallen apart in the recent times (Kshitij Advisory Services, which formed a strategic JV with CapitaL, JV between Pantaloon Retail India and kidswear brand Gini & Jony etc) – more so because of the US recession fear and the general market sentiments.
Well, the investment slowdown is not just the India story, but is a US-wide phenomena too and investments in start-ups fell 5% to $7.1 billion during the first qtr of 2008, compared to the year-ago quarter.
What’s happening in India?
Essentially, when there are slowdown fears, VCs will start investing in “safe” sectors like real estate and infrastructure instead of “where-is-the-business-model”, i.e. web/mobile sector. Case in point: Google-backed Erasmic recently invested in Kaati zone (food outlet).
Look at the positive side of the entire story – the investment is happening in areas that matter the most, i.e. infrastructure, energy and telecom; followed by manufacturing and then web/mobile – which in my opinion is a healthy sign.
What do you think? Do we need a “Google” kind of story in India – a story which makes everybody else take note of Indian web/mobile story?
Share your opinion.
“Google-backed Erasmic recently invested in Kaati zone (food outlet)”
recently???
Abhishek -I believe the investment was announced 2 months back.. “recently” is a little “relative term” here!
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Internet startups are very different from other sectors , especially in India where more than half our population still doesn’t use it.VC’s must look at WEB startups who have a global approach with their business.
“the investment is happening in areas that matter the most, i.e. infrastructure, energy and telecom; followed by manufacturing and then web/mobile – which in my opinion is a healthy sign”
Agree 100% but whether this is due to slowdown effect..i really doubt. i think VC guys following pure common sense approach “put money where u find incremental traction” and this days all this six sector have turbulence growth, so no wonder why VC will miss the bus…
bhadra
real estate alone saw investments to the tune of $2.6 bn, here is a chart of all realty investments
http://india.dalalstreet.biz/earningsnews/2008/04/private-equity-in-real-estate.html
so when india is ready with basic infrastructure, new kids will come with innovation and build new things making it a better marketplace than what it is today
We see a lot of investment happening in infrastructure, real estate.. what kind of investment can go behind a web2.0 business model and what returns do such Investment provide or VC expects
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