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Investment by PE, VC funds decline in 2012

Investment by PE, VC funds decline in 2012

Private Equity and venture capital funds invested $7.6 billion across 415 deals in 2012, which is a fall of 21 percent from the year-ago period of $9.6 billion, global consultancy firm Ernst & Young said.

The decline in the investment is mainly because of a significant fall in infrastructure sector investments $2.3 billion invested in 2011, compared with $774 million in 2012), the firm said in a report. There were only two deals of $100 million or more in the infrastructure sector last year compared to 2011.

The sector has weakened owing to a multitude of issues, including policy breakdown and consequent lack of government approvals, low funding and corruption allegations, it said.

The report shows that healthcare, technology, travel and agriculture sectors saw significant jump in the investment values last year, though some driven by a few large deals.

According to the firm, the investment by these funds in 2013 may also decline. Sectors related to direct consumption such as consumer products, health care and financial services will continue to be the key focus sectors in 2013, the report noted.

Further, E&Y said that infrastructure can be a major swing factor in the overall activity especially if the government takes steps, both policy and administrative to boost investment activity in the sector.

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