PE investments in power sector dip 17 per cent in FY10

Private equity (PE) investments in the country's power sector plummeted 17 per cent to $1,061 million (around Rs 4,700 crore) in 2009-10, as compared with $1,289 million (Rs 5,710 crore) in 2008-09.

Attributing the drop to financial crisis, industry experts said the number of PE deals remained flat during the same period. While PE investments in conventional energy projects grew over 400 per cent, non-conventional investments reported a 68 per cent drop.

PE investments in the conventional energy sector stood at $694 million (Rs 3,074 crore) in FY10, as against $129 million (Rs 571 crore) in 2008-09. In 2007-08, it was around $702 million (Rs 3109 crore), according to data compiled by Venture Intelligence, a Chennai-based research company.

Venture Intelligence chief executive officer Arun Natarajan said : “One should not look from the value perspective. It should be the number of deals, which remained flat. This shows that PE investors are still betting big on the country’s energy sector.”

Natarajan said power is a stable bet for PE investors as compared with other infrastructure industries. “In 2009-10, big ticket investments have come down in the energy sector, but the appetite is now coming back,” he said.

In 2009-10, the number of deals, including conventional and non-conventional, stood at 27. The figure remained the same during the same period last year. However, the number of deals carried out by the PE investors was 36 in 2007-08.

In the conventional energy sector, eight deals were concluded from April 2009 to March 2010, as compared with three a year ago. In 2007-08, only five deals were concluded, he added.

Some of the top deals in the conventional energy sector include an investment of $425 million (Rs 1,883 crore) by a consortium of General Atlantic, Morgan Stanley, Norwest, Goldman Sachs and Everstone in Asian Geno in March 2010.