Apr-Sept sees $5.4 bn PE funds: Study

India, which happens to be the world's second-fastest growing economy and a global outsourcing hub, has seen private equity funding more than double in 2006 as cash-rich investors from the US and Europe eye a major chunk of the booming market.

The total investments by private equity players have soared to $5.4 billion in the first nine months of 2006 compared to $2.2 billion in the whole of last year, global consulting firm PricewaterhouseCoopers (PwC) said in a study.

As many as 246 deals have taken place so far in 2006 as against 169 in the whole of 2005, it added. The largest deal was the $900-million buyout by Kohlberg Kravis Roberts and Co, one of the largest PE funds in the US, for 85 per cent in Flextronics Software.

Singaporean firm Temasek bought 10 per cent stake in Tata Teleservices for $360 million, Farallon invested $143 million in Indiabulls Financial and Warburg Pincus acquired 27 per cent stake in Lemon Tree Hotels, PwC said.

The steady inflow of investments in India is attributed to the growing consumer spending, which has lead to emergence of high demand and a fast growing market. Besides, the recognition of India as a high-quality, low-cost production and R&D destination has also lured PE investors to the country.

However, as compared to the traditional seed or growth stage funding that venture capitalists provide in other markets such as the US and Europe, investments in India have mostly been for late-stage funding and private investments in public enterprises, PwC said.