Global Funds Make a Beeline for Indian Banks, Finance Firms; $1.46 Billion Investment Made in 6 Months
Tuesday, July 21, 2015
Finance and banking firms, big and small, are raising large sums of money from foreign investors jousting for a slice of action in the world’s fastest-growing major economy.
Indian financial services firms delivered the second-highest return on invested capital for private equity firms during 2009-13, a recent study by global consultancy firm McKinsey & Co showed.
Investors looking for growth and returns in a sluggish economy are pouring money into small- and mediumsized finance firms whose nimble models are delivering financial inclusion and growth faster than that of the stateowned banks.
In the first six months of 2015, private equity funds invested $1.46 billion in finance firms, compared with $1.29 billion in the same period of 2014 and $0.9 billion in Jan-June 2013, a Bain Consulting study showed.
“Financial services sector has been very warm over the last two years as it happens to be one sector where most of the large private equity funds have been very focused. While in banks shareholding of more than 5% is not allowed, so the focus has been on NBFCs in areas like vehicle finance, home finance and even microfinance,” said Sanjeev Krishan, leader (private equity and transaction services), PricewaterhouseCoopers India.
A McKinsey study released earlier this year showed that returns on invested capital for private equity investments in financial services were 14%, second only to information technology’s 39% in 2009-13.