Private Equity Firms Display Diminished Interest in Indian Realty and Infrastructure Sectors
India experienced a notable decrease in private equity investment during the preceding year. According to research conducted by Grant Thornton, a prominent global accounting firm, private equity firms have exhibited a reduced level of interest in both the Indian real estate and infrastructure sectors.
Indian Realty Loses Its Attracting Charm.
The Grant Thornton report indicates that private equity firms invested $7.4 billion in India during 2012. This figure represents a considerable decrease compared to the previous year's investment of $8.8 billion, as indicated by the report.
The report highlights a 15% decline in private equity investment specifically within the real estate sector. Despite a marginal increase of 0.4% in the number of private equity transactions in 2012, the overall investment amount remained lower. Despite this decrease, Grant Thornton maintains a positive outlook for the year 2013.
Private Equity Firms Lose Interest in Indian Realty.
The Central Government has implemented proactive measures aimed at attracting investors back to India. While these initiatives were intended to entice investors in 2012, their impact proved to be limited due to their late implementation.
According to Mr. Harish HV, a partner at Grant Thornton India, the anticipation is that India will secure a more substantial amount of investment moving forward. He stated that "India is expected to receive better amount of investment." In addition, he suggested that while the number of private equity deals might not increase substantially, the amount of investment could potentially rise.
Overall, the preceding year proved unsatisfactory for investors, with significant declines observed across various sectors. Infrastructure experienced the most substantial decrease, plummeting by 59%. The real estate sector followed, witnessing a 33.4% decline in investment, while the banking and financial services sector saw a 15.7% reduction.
Conversely, sectors such as IT and ITeS, Indian Pharma, healthcare, and biotech experienced growth in investment. The IT and ITeS sectors recorded a 19% increase in investment, while the Pharma and Healthcare sectors witnessed growth exceeding 200%. Given the shift in investor sentiment towards other sectors, questions arise regarding the prospects for Indian real estate. Nonetheless, it appears that the government's efforts to attract foreign investors are progressing in the right direction.