PE, VC funding touch $1.9 bn in first qtr of 2010

Reflecting the improved financial market situation, the amount of private equity and venture capital funding in the country touched $1.9 billion in the first three months of 2010.

The quantum of private equity and venture capital funds (PE/VC) that flowed in the first quarter of this year is nearly half of the total of $4.4 billion seen in 2009, according to global consultancy Deloitte.

Going by the report, the total funding of $1.9 billion in the first three months of 2010 came from 88 transactions, with an average deal size of $22.1 million.

Last year, $4.4 billion was on account of 299 deals and the average value was just $14.6 million.

"The PE/VC funding in India is picking up and has improved significantly in recent months," Deloitte's Senior Director Kalpana Jain told PTI.

The flow of funds is primarily driven by strong fundamentals of India's economic growth, she added.

However, she noted that the level of investments is not back at the 2007 levels, mainly the period before the onset of the global financial meltdown.

Last year, the funding activities of PE/VC entities were adversely hit by the financial crisis, with many players even pulling out their investments.

Currently, PE and VC investors are mainly looking at sectors like clean energy, healthcare, infrastructure and education.

According to Jain, regulatory hurdles should be resolved in the education and healthcare segments, which would help these sectors to attract more private equity investors.

The country's private education market is estimated to be worth $40 billion.

Regarding PE funding trends in recent times, Kalpana Jain said that at times, there was a mismatch between valuation and the expectations from the investors.