Notwithstanding the massive plunge in the 2009 first quarter private equity (PE) activities in China by 50 percent and in India by 87 percent, the two countries managed to sweep-clean a majority – more than 70 percent - of the PE deals in the Asia-Pacific region!

During the first quarter of 2009, from January to March, private equity firms struck 36 deals amounting to an investment of nearly $526 million. These figures mark a considerable drop from the same-quarter year-before figures of 133 deals totaling $3.9 billion in investment.

Most of the PE investors are refraining from making investments because, with the plummeting asset prices and valuations over the last year, they feel they might make the same investment at a lower valuation in future.  

According to experts, PIPE - private investment in public equity – deals, which earlier comprised almost 60 percent of all deals, have fallen due to the secondary markets trading down and valuations suffering a blow, resulting in an aversion to invest into listed equity. In addition to this, issuers do not wish to raise equity at the present day’s lower valuations.

Commenting on the scenario, Probir Rao, MD, investment banking UBS India, said: “With trade and capital market exits becoming difficult, investors are unable to recycle investments and are ‘stuck’ with holding investments for a longer term.”