Private equity (PE) investments for the first half of 2011 calendar year have seen an increase of 38% to $5.8 billion. This jump of 38% in PE investment is led by increased number of large-size transaction and increased activities in infrastructure sector. With capital markets remaining sluggish, more and more investors seem to be preferring the PE route to raise funds.
According to the global consultancy firm Ernst & Young (E&Y), the PE deal value in the six months ended June climbed 34% to $5.8 billion as compared to same period a year ago,” E&Y Partner (Private Equity) Mayank Rastogi said, 'The increase in aggregate deal value was largely driven by greater number of large deals (deals over $100 million). Top 10 deals in H1 '11 aggregated $2.7 billion compared to $1.75 billion in H2 '10 and $2 billion in H1 '10.”
During the first six months of 2011, PE deals were much higher than 154 transactions saw in the six months of last year. Infrastructure attracted maximum private equity investment in first six months of 2011, it accounted for more than $1.35 billion. In terms of numbers of deals, retail and consumer products saw highest deals with 29 transactions. It was followed by infrastructure with 28 deals and technology with 23 transactions.
'This trend of infrastructure sector attracting the most PE investments has continued from H1 '10 and H2 '10, where it recorded 27% ($1.16 billion) and 36% ($1.36 billion) of aggregate PE investments, respectively,' Mayank Rastogi said.
The major PE investments in the first six months include GIC and Bain Capital investing in $850 million into Hero Investment. Other major transactions were Apollo Management LP investing $350 million in Welspun Corp and Apax Partners investing $330 million in iGate Patni.
According to E&Y, India-focused private equity funds mopped up as much as $2.8 billion in the first half of 2011. Conversely, because of weak capital market conditions, exit activities of PE players remained slow, 'the volatile capital markets have been a significant factor for such decline in exit activity during H1 '11,' E&Y noted.
The weak market conditions have helped to increase the activities of PE; many companies which have failed to raise money from IPOs or were looking to raise money on public market are now actively looking to raise money from private equities.
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