PE investments likely to cross $7 bn in 2010: E&Y

India is likely to get over $7 billion in private equity (PE) investments in 2010, as robust economic growth is making the country an attractive market for fund managers, according to global consultancy, Ernst & Young (E&Y).

“PE investments are expected to touch $6.5 billion in 2010, up from $3.5 billion in 2009,” E&Y’s Partner (Private Equity) Mayank Rastogi said.

“This number may well cross the $7-billion-mark if some of the large-ticket deals, which are currently in works, get announced in the last week of December,” he said.

Sectors like power and transportation, infrastructure ancillaries, consumer and branded products, healthcare, education and financial services, are expected to witness increased PE activity next year.

“Exits are likely to become a mainstream activity as the funds turn a full investment cycle in India. Secondary deal activity is expected to increase, with significant exits expected over next 12 to 18 months,” he said.

According to Rastogi, exit activities by PE players rose in 2010, driven by three factors – vintage of PE investments in India, healthy capital markets performance and developing secondary markets.

“In 2010, PE firms recorded more than 80 exits at $5.5 billion, comprising initial public offers, strategic sales, buybacks and secondary deals. This exit performance was the strongest ever in the history of PE in India,” Rastogi said.

Bucking the overall slowdown in 2009, PE market witnessed increased activity this year. Sluggish global economy, coupled with good domestic growth prospects, drove fund managers to park money in the Indian markets.