PE investment in Q3 falls to 4-yr low

PE investment in Q3 falls to 4-yr low

New Delhi: Private Equity (PE) investment in the country slowed to a four-year low of $763 million in the July-September quarter of this fiscal, but analysts are still hopeful and expect sentiments to turn bullish in early 2010.

PE firms invested about $763 million across 47 deals during the quarter ended September 2009, a level last seen in 2005, as per data compiled by deal tracking firm Venture Intelligence. In 2005 PE firms pumped in $698 million through 38 deals.

The investment in the September quarter is a 70% drop from the same period last year, which saw an investment of $2.5 billion through 132 deals.

“Deals with higher valuations which were eminent last year is losing stem now as the risk appetite is still low. We see investments improving in the first quarter of 2010," Venture Intelligence chief executive Arun Natarajan said.

On a quarter-on-quarter basis, there has been a 21% drop in investments from $964 million across 47 deals.

During the first nine months of 2009, PE firms invested $2.3 billion across 140 deals, a 76% drop from $9.5 billion from 365 deals during the corresponding period in 2008, Venture Intelligence data shows.

“Confidence among PE investors would return in some time even as the secondary market has recovered from its lows. Going forward we would see increase in the number of PE deals as investors are waiting for the right time to enter the market," Natarajan noted.