Date:16/07/2005 URL: http://www.thehindubusinessline.com/2005/07/16/stories/2005071602051300.htm

Back Pvt equity firms' investment surges

Neha Kaushik

New Delhi , July 15

PRIVATE equity firms have already pumped in upwards of $650 million in the Indian market in the first five months of the calendar year.

And this may end up looking like a trickle, considering the flow of leading private equity players such as Blackstone, Actis, Carlyle and 3i among others who have recently announced the establishment of mammoth-sized dedicated India funds.

However, a broad industry analysis of private equity investments in the January to May period showed that while there were no deals that crossed the $100-million mark in the period, the number of deals estimated at over $20 million is growing rapidly. In fact, almost 15 of the deals struck in the January to May period were valued at more than $20 million.

And it is not only the conventional sectors such as the services or technology oriented ones that are driving investments, but a range of upcoming ones too. Industry watchers pointed out that sectors such as tourism and retail seem to have found a favourable slot in the investment spectrum of private equity players, with more than six deals inked in the tourism sector alone this year.

This includes a $32-million investment by IDFC, HDFC and IL&FS in luxury hotel chain Leela Hotels, and $11.6 million investment by IDFC in Chalet Hotels. Other investments in the sector have been in Sky Gourmet, Royal Airways, PIEM Hotels and CLG Hotels.

The bulk of the deals though seem to be going down the pharma lane, with almost 10 major deals in the pharma sector estimated at over $100 million in the January-May period. This includes the $56-million investment by ICICI Ventures in Dr Reddy's, IFC's $15- million investment in Dabur Pharma and an investment of $23 million in Malladi Drugs by ICICI Ventures, IL&FS VC & Sander Morris Harris Group.

The boom in the automobile industry too has not gone unnoticed. According to industry analysts, at least four deals have been struck with automotive companies during the period. The largest investment in the sector during the period was Temasek's $60 million investment in Mahindra & Mahindra.

The UK-based private equity firm Actis made two investments in the sector in the period. This included $11-million investment in Swaraj Mazda and a $17.8-million investment in AVTEC (which was spun off from the auto components business of Hindustan Motors).