New Delhi: Strong growth fundamentals of the country will help private equity investments to hit 16-billion dollar mark this year and India is likely to remain a popular destination for the next few years, a latest report says.
“PE investments might be in the $14-16 billion range for the calender year 2008 and will remain a popular destination for the next two-three years along with China Brazil and Vietnam, Four-S Services, a provider of research, financial consulting and business content services said in its latest report.
In the first two months of this year, as many as 84 private equity or venture capital deals worth nearly $4.1 billion have already been announced, the report added.
Though investments in the private equity arena are flowing in, the year 2008, it would be little ‘cautious´, because of the downturn in the US economy, appreciating rupee, high oil prices among others, Four-S Services said.
However, the global credit crunch would not impact India much, as the major portion of the 8%-plus growth of the country would be driven by domestic demand.
The PE investments would get a further fillip from the reasonable valuations that are prevailing after the 20-25% market correction so far this year.
The Indian markets are expected to witness a further correction before investments picks up. “The investment momentum is expected to rise in the second half of 2008, that is post July,” the report added.
The report however pointed out that some of the factors that could pose challenges to the PE investment sector include lower growth rates for export-based industries due to strong rupee, high oil prices which is one of the reason behind high inflation, potential capital gains tax on external funds routed through Mauritius.