India has emerged as the most favoured private equity (PE) destination attracting $1,239.22 million (Rs5,466.20 crore) worth investments in January, surpassing Asian giants like China and Japan, a study says.
India ranks top in terms of PE investments in January-February and has left behind Asian giants like China with $609 million and Japan with $980 million, according to a reportby the Asian Venture Capital Journal (AVCJ). It monitors private equity flows under management around the world.
The report, on Asia-Pacific emerging as the most attractive region for investment, said, the total Asian private equity capital under management rose by almost 30% in 2006 to $158 billion compared with $122 billion in 2005. “It was a watershed year for Asia-Pacific (private equity),” KPMG partner and COO for advisory in Asia Paul Borough commented on the PE investment trend in 2006.
India was also among the top 10 PE destinations last year, with the country witnessing a whopping growth of 252% with investment as high as $7,009 million for 2006 as against just $1, 992 million in 2005. The top 10 chart includes, Australia with $24,934 million worth investments, China $7,721 million, and Japan $10, 350 million.
Interestingly, in terms of fund raising focused on specific markets, India faired quite well, while Australia and China were the most popular. Fund raising for Australia rose 88.9% during the year, followed by China at 72.1%, it said. India posted decent increase of 37.6%.“India and China are really becoming very significant destinations for capital,” Borough added.
Meanwhile, the AVCJ report sounded a warning bell as it forecast a not-so-smooth growth of private equity in Asia. Some significant risks and issues are already emerging. Regulatory difficulties in China were much publicized last year. Few seem to regard these as permanent obstacles, the report said.
Moreover, intractable challenges may come from the industry itself as funds raised at the height of the cycle tend not to perform as well as those raised when the market is down, CLSA Capital Partners Deputy CEO Josephine Price said.
Long-term trend appears still headed toward the US or European levels of penetration into Asia’s broad economy, the report said.