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 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.
Singapore's 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 increasing recognition of India as a high-quality, low-cost production and Research and Development destination also lured PE investors to the country.
However, as compared to the traditional seed or growth stage funding that venture capitsalists 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.
According to the PwC report on PE investments, pre-IPO funding space also saw significant deals over the last year, though they slowed down in the third quarter of 2006.
Infrastructure growth with public-private-partnership in projects, talented workforce, management skills and government inclination towards reforms to create an investment friendly atmosphere, all contributed to the India story, it said.
PwC said unlike the technology boom of the late 1990s and early 2000, investments are now being made across a variety of sectors such as auto components, real estate, infrastructure and pharmaceutical, indicating a gradual shift in focus from the traditionally blue-eyed information technology sector.
The past two years have witnessed a slew of funds entering India such as Blackstone, 3i, Helion Ventures, New Enterprise Associates and Matrix Partners, the report said.
Meanwhile, India players like IDFC Private Equity and IL&FS have also obtained a strong foothold in the market.
But these funds have faced a stiff competition from hedge funds and pre-IPO funds such as Farrallon Capital, New Vernon, Soros Funds Management and Octant Capital, it added.
