Strong PE investments in India likely: Report

According to a study by global consulting firm, Boston Analytics, around 903 private equity investments worth 24.8 billion dollars in value were made in India from 2004-2007, with more than 45 of those deals exceeding 100 million dollar.

In 2003, private equity investments were just 56 with an average size of 8.4 million dollars but it increased rapidly in the past four years to 387 deals worth on average of 36.8 million dollars by 2007.

According to the report titled 'Private equity landscape in India', demographic and economic factors spurred this rapid growth. The liberalisation of India's economy coupled with a middle class that grew to more than 300 million provided an increasingly diverse skill base awash with more and more disposable income thereby resulting in a large consumer base and a need for a variety of different services.

The study reveals that country's current market situation and the dynamics of its economy are likely to result in continued growth through 2010.

The major attributes favouring the country's investment climate include rapid GDP growth, favourable demographics as about half of the population is under the age of 25 and a high domestic savings rates.

Interestingly, the correction in the domestic stock market with the benchmark index Sensex dropping by 21 per cent in the first two months this year, has eased valuations of target companies for private equity investments.

Besides, a comfortable foreign exchange reserves position of $301 billion in February, the report added.