Pvt equity firms eye real estate in Q4

Private Equity and Venture Capital investors have translated their strong interest in India's booming Real Estate sector into actual deals during the first quarter of 2006.

After announcing new funds for real estate during 2005, PE firms made at least eight investments worth about $350 million during the January-March quarter, according to a study by Venture Intelligence India.

Powered by this fresh impetus, a total of $1.4 billion was invested during the fourth quarter of 2005-06, taking the total investments in the year to a staggering $3.18 billion as against $1.19 billion during 2004-05, a jump of 167 per cent.

During the first quarter, $407 million was invested, second quarter saw $589 million, while $799 million was invested during the third quarter.

"The fact that real estate has emerged as the second most favoured industry for PE investments during this quarter - after IT & ITeS and manufacturing - is a clear sign of things to come," said Arun Natarajan of Venture Intelligence.

"This significant deal activity indicates that PE firms and developers are working together actively to overcome issues like corporate governance that were initially considered as major challenges to investments in this industry," he added.

With 22 deals worth about $558 million (including Temasek's $360 million reported investment in Tata TeleServices), the IT & ITeS industry received the most number of investments during the January-March 2006 quarter. Within IT & ITeS, PE & VC firms favoured companies in sectors like online & mobile services and IT Services.

IT & ITeS was followed by real estate and manufacturing industry, with 11 deals worth about $147 million.

Within manufacturing, sectors like cement and automobile components continued to remain the favorite among PE investors, the Venture Intelligence study showed.