India’s Private Equity Investments Increased 69% in 2011

Investment in private equity in India rose by 69% in 2011, according to the private equity research company Venture Intelligence. 53 private equity transactions in India raked in $2.68 billion, up from $1.58 billion through 55 investments in 2010.

Many of India’s developers are coming to prefer private equity investments because of the scarcity of sales and financial institutions that are reluctant to provide funding. With private equity funds, Indian developers are seeing rates of return ranging from 25 to 30 percent.

Most of the investments (57 percent) were residential projects, while 19 percent were commercial. Among the largest was Jeff Morgan Capital Ltd’s investment of $320 million in the film city project by Compact Disc India (CDI). Warburg Pincus LLC provided 14 billion rupee ($270 million) in a joint residential project with Lemon Tree Hotels, and Blackstone Group LP made a $200 million investment in Bangalore’s Manyata Embassy Business Park.

Not all transactions of this nature are made public. In 2011, 53 of the 69 private equity transactions were announced. In 2010, 55 of 63 were made public. Private equity investments are not traded on the stock market. By making these investments, private equity firms can gain partial or even complete private control of the companies in which they invest.

Tavis J. Hampton

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