PE investments down 80% in October-November

 

Private equity investments have declined by as much as 80% in the first two months of December quarter with the ongoing credit crunch casting its shadow on the investment space of the country.

The private equity investment in 41 companies during the October-November period stood at $969.22 million, an 80% plunge over the same period last year.

In the last year, there were as many as 71 deals during the corresponding period attracting an investment of $4,753.98 million, as per data compiled by Nexgen Capital, the merchant-banking arm of brokerage firm SMC Global.

"With FII selling offsetting the investment this year and slowdown in the global economy there is a lack of clarity about the entire economic scenario in the country. Hence, PE funds are adopting a wait-and-watch approach before investing their money," Venture Intelligence Founder and CEO Arun Natarajan said.

Meanwhile, analysts feel that volatility in the currency market has put pressure on the PE investors in the country as they are confused over the valuation of the company.

"The number of PE deals are coming down this quarter and the road ahead is also quite competitive for the corporates as redemption pressure and lack of conviction are forcing PE players to hold back investment," Nexgen Capital Equity Head Jagannadham Thunuguntla said.

Also slowdown hit corporates, who are witnessing value erosion, would now see the average PE deal size coming down substantially from the previous period.