India sees $4.72 bn PE deals in H1 2013; outlook bullish: PwC

Private equity deals in India were up 15% at $4.72 billion during the first half of this year and the outlook for the second half looks bullish, says a PwC report.

Although the deal volume shrunk significantly from 266 deals in the first half of 2012 to 166 deals this year, the aggregate total deal value of $4.72 billion now compares favourably with January-June 2012, the report said.

With respect to exits, however, the first half witnessed exits worth $2.51 billion, up 68%, as compared to $1.48 billion worth of exits in the same period last year, through 54 deals, PwC said.

The $1.26 billion investment in Bharti Airtel by the Qatar Foundation significantly boosted the deal value in the first six months of this year.

Going forward, PwC said, the outlook for the second half of this year still holds promise as fresh investments are cheaper, thanks to the falling rupee, recovery of the US markets and active crisis control in Europe.

The report further noted that the government seems to have "shed the self inflicted state of inertia and rural demand has been on an upswing in recent times".

PwC Leader Private Equity and Transaction Services Sanjeev Krishnan said: "In summary, there seems to be hope as we set into the second half of the year."

Krishnan further noted that "all of the above is however predicted on a 6-7% GDP growth over the next year. A sustained slowdown can on the contrary hurt the subject of investments more than the PE funds themselves, something that India could ill afford at the moment".

PwC said India's macro-economic environment does not hold a lot of promise; the current account deficit at over 5% is worrisome as is the fiscal deficit. Moreover, headline inflation has proved to be "sticky" and remained above 7% for most of 2012-13, it added.