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Mar. 9 – China and India are ranked among the top three investment destinations for private equity (PE) firms in the world, according to a report by consulting firm Bain & Company.
The United States topped the list despite being among the worst hit by the Global Financial Crisis. In contrast, China and India recovered sharply ahead of most other economies from the slowdown that hit markets in 2008. The report pointed out that India is emerging as an attractive investment market for PE firms as an increasing number of family-owned businesses are turning to outside investors to raise funds.
Rapid domestic expansion across several sectors is set to provide ample opportunities for growth-capital investing within the country, said Sri Rajan, head of Bain and Company’s PE practice in India.
“Given the growth trajectory in India, PE investments will pick up in the coming fiscal but the average value of deals will be lower than that of 2007, which was the boom period for investments. Key sectors that will witness an upswing in future are infrastructure and healthcare,” he said.
The report also said PE deals are showing signs of recovery globally with value of buyouts moving to US$36 billion in the past quarter of 2009 after hitting a low of US$8 billion for the quarter ending March 2009. However, even as PE firms are flush with commitment now, raising capital will still be a challenge over the short term, it said.
Fund-raising more than halved in each of the four quarters of 2009 year-on-year, shrinking as much as 76 percent to US$37 billion in the fourth quarter ending in December, the lowest since the third quarter of 2004, according to the report.
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