Private equity investments scale records in 2004-end

The boom in the Indian economy has another endorsement. Private equity investments during the last quarter of calendar 2004 saw a whopping almost five-fold increase to touch $440 million from $85 million during third quarter of 2004.

The $440 million worth of investments were made in around 30 deals and the dominant trend was private investment into publicly traded companies.

Leading the pack of investors were Warburg Pincus, Chrys Capital and ICICI Ventures. Said Arun Natarajan, editor, TSJ Media which tracks venture capital and private equity investments in India: "The boom during the last quarter of 2004 was basically due to political stability and the performance of publicly-traded companies."

On a year-on-year basis, 2004 ended with a total investment of $850 million as against a total of $700 million during 2003. The first quarter of 2004 saw investments of $270 million, while the second quarter registered $240 million, third quarter saw a dip to $85 million and the fourth quarter ended with a high of $440 million.

Another significant shift is that there has been a dip in venture capital investments in start-up companies which was the norm during the dot-com boom.

Private equity investors are today increasingly looking at investing in mature companies and with scalability as one of the crucial factors for investment.

Said Natarajan: "It is clear that unlike the previous two years when BPO ruled the roost, no single sector dominated during 2004. Private equity and venture capital funds invested actively in a range of sectors including IT-Hardware (Moser Baer, Midas Communications), Pharmaceuticals (Aurobindo, Jubilant Organosys, Nectar Lise), Healthcare (Max India, Apollo Hospitals), BPO (ICICI OneSource, OfficeTiger), Banking (Kotak Mahindra, YES Bank), Engineering & Construction Services (Punj Lloyd, Gammon India, Nagarjuna) and in Manufacturing (India Cements, Exide Industries)."