Following up on the Indian Private Equity bubble, news came out this week that Private Equity investment in India dropped a staggering 87% in the first quarter of 2009 compared to the Q1 2008, and that equates to a 56% decline from the previous quarter (Q4 2008). PE firms invested approximately $526 million across 36 deals during the first three months of this year, as compared to $3.9 billion spread over 133 deals during the same period of last year. This is also significantly lower than the $1.2 billion spent across 63 deals in the last quarter of 2008.
It wasn’t just Buyouts and Growth Capital that was hard hit, Venture Capital (VC) activity saw a marked drop with VC firms investing $44 million over just 9 deals during Q1 (compare with $91 million across 18 deals in Q4 2008 and $226 million across 33 deals in Q1 2008).
Numbers should continue to be low as Private Equity investors take a cautious approach to the risk/reward opportunities in emerging markets.
The investment breakdown by sector was as follows:
IT & ITES—36%
Media & Entertainment—5%
Engg and Construction—6%
Healthcare and Life Sciences—6%
Shipping & Logistics—6%