Venture capitalists, private equities to invest over $8.5 bn in India

August 4th, 2008 - 9:04 pm ICT by IANS  

New Delhi, Aug 4 (IANS) Venture capitalists (VCs) and private equities (PEs) are expected to invest over $8.5 billion (Rs.358 billion) in India over the next five years, according to a report released here Monday. The report, prepared jointly by global consulting giant Deloitte and industry lobby Associated Chambers of Commerce and Industry of India (Assocham), identified five areas that will attract these investments: biotechnology and life sciences, logistics, clean technology, film production and education.

The paper titled “Indian Venture Capital - A Future Scenario”, says VCs and PEs, which for long have been investing only in the information technology (IT) sector, have now begun to see opportunities in these five areas.

The opportunities have come up as the regulatory regimes for these industries are gradually disappearing.

While releasing the report to the media, Assocham president Sajjan Jindal said the life sciences industry has been attracting both domestic and global specialist venture capitalists.

For example, the US-based Life Sciences Fund has recently invested approximately $20 million (Rs.842 million) in a Hyderabad-based pharmaceutical company, Jindal added.

Devices and diagnostics are other areas where investors are active. It is anticipated that by 2012 the biotechnology and life sciences industries alone will attract investments of about $1.5 billion from VCs and PEs, he said.

According to him, VCs are also expected to invest over $2 billion (Rs.84.2 billion) in India’s maritime infrastructure and logistics sectors to tap the rising demand for exports and imports.

The report said the National Maritime Development Programme envisages huge investment to upgrade India’s maritime sector, of which 64 percent is expected to come from VCs and PEs.

These funds are also looking at possibilities in ancillary businesses that support maritime trade such as warehousing and container freight stations.

Clean technology is yet another area where VCs and PEs would grow more and more active, Jindal said quoting the report.

In 2007, investors committed $290 million (Rs.12.2 billion) in 11 clean technology investment deals compared to $140 million (Rs.5.9 billion) in nine deals the year before, Jindal said.

The momentum is expected to continue over the coming years given the government’s initiatives and policy focus on clean technology, he said.

It is expected that PEs and VCs would be able to jointly garner an investment of $3.5 billion (Rs.147.4 billion) in clean technology areas in the next few years, said Jindal.

The other prospective areas in which VCs and PEs would make huge investments include Indian film production and education.

The Indian film industry currently is valued at $1.8 billion (Rs.75.8 billion) and is expected to grow at a rate of over 25 percent and reach a level of over $5 billion (Rs.211 billion) by 2011.

Assocham expects $250 million (Rs.10.5 billion) in VC investments in this industry during the next five years, he said.

A global PE firm with $36 billion (Rs.1.5 trillion) in assets is planning to invest about $200 million (Rs.8.4 billion) in the Indian education sector, Jindal said.

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