$2.2 bn invested through private equity in 2005

Close to $2.2 billion was invested in Indian firms by private equity investors in 2005. This is close to a billion dollars more than the $1.6 billion invested through the route in 2004.

Private equity and venture capital firms continued to favour the IT & ITES industry the most in 2005, investing about $457 million across 42 deals, according to early figures from TSJ Media's Venture Intelligence India service.

The largest deal in the IT & ITES industry was the $99.6 million invested by the US-based Infinity Capital to acquire a 40 per cent stake in ISP and networking services firm Sify, followed by ICICI Ventures' $62.3 million investment in publicly-listed IT services firm Scandent.

Manufacturing emerged as the second most favoured industry with 24 investments totalling $318 million, Venture Intelligence India revealed.

While auto components was the most active sector within manufacturing (accounting for six deals), the single largest deal in the manufacturing industry was ICICI Ventures' $59.8 million buyout of ACC's refractory division.

The healthcare and life sciences sector, led by the $45 million investment by ICICI Ventures and CVC International in Perlecan Pharma (an R&D spin out from Dr Reddy's Labs), emerged as the third most favoured industry among PE firms with 16 investments worth about $256 million.

The hotels & resorts industry emerged as a new favourite among PE investors this year, attracting $106 million across seven deals.

In the October-December 2005 quarter, PE & VC firms have invested about $758 million across 44 deals. This figure compares to 30 deals worth $939 million during the same period last year, including the $500 million buyout of GE from its Indian BPO subsidiary.

The figures for the immediate previous quarter (July-Sepember 2005) were 28 deals worth about $528 million.