The Hindu Business Line : Realty, IT grab major share of venture capital funds

Kolkata, July 31 Real estate and information technology are two of the top sectors that have been most aggressively pursued by venture capital funds, including foreign venture capital investors.

Industry-wise data mined by the Securities and Exchange Board of India and released for the first time reveal VC investments in the country have been progressively on the rise, standing at Rs 20,310 crore as on June 30, 2007, higher than Rs 17,621 crore that added up for the previous quarter (March).

Real estate, which has lately drawn considerable attention from retail and institutional investors, has topped the charts with Rs 2,788 crore in all. Of this, venture capital funds (VCFs) accounted for Rs 1,900 crore, while foreign venture capital investors (FVCIs) made up Rs 888 crore.

The services sector, a sweeping term that no doubt comprises a number of segments, is the second-biggest recipient of VC funds, a total of Rs 2,020 crore. IT occupies the third place with Rs 1,695 crore.

Some of the other larger sectoral recipients are: Industrial products (Rs 924 crore in all), telecommunications (Rs 908 crore) and pharmaceuticals (Rs 797 crore). Media & entertainment (Rs 510 crore) and biotechnology (Rs 348 crore) are both smaller in comparison.

Cumulative figures up

The cumulative investment details (the SEBI data pertain to the last four quarters) suggest that aggregate VC investments rose last year too. The tally for September 30 and December 31, 2006, stood at Rs 12,127 crore and Rs 14,903 crore, respectively. It may be mentioned here that VCF data partly include FVCI investments too; additionally, the data is based on quarterly information submitted by registered VCs/FVCIs.

Comparing the September 2006 and June 2007 positions, it is clear that telecom and services have seen huge increase in VC inflows. In the case of the former, allocations have gone up massively, from Rs 115 crore to Rs 908 crore. In the case of services, there has been a near-doubling from Rs 1,018 crore to Rs 2,020 crore.

On the other side, real estate (despite being the top grosser) has actually seen a progressive dip. As on September 30, 2006, the sector witnessed an investment of Rs 3,568 crore. This whittled down to Rs 2,788 crore in June this year. The scores for the two quarters in the middle – December and March – were Rs 4,056 crore and Rs 2,857 crore, respectively.

As for the pharma sector, a point-to-point comparison indicates that this has not seen much change. The September 2006 tally was Rs 796 crore, which marginally went up to Rs 797 crore in June this year. The figures for the two quarters in the middle were Rs 682 crore and Rs 714 crore, respectively.