New Delhi: India is likely to see private equity (PE) investments to the tune of USD 10 billion in 2011, especially as more companies look beyond capital markets to meet their funding needs, according to global consultancy E&Y.

Sluggish stock market trends and increased investor activities are resulting in higher Private Equity (PE) investments, which were close to USD 4.5 billion till May, 2011.

"... the current activity and deal pipeline suggests that we could see similar number as in 2008 (close to USD 10 billion)," Ernst & Young Partner (PE) Mayank Rastogi said about expected private equity investment in 2011. Last year, the country saw PE investments worth over USD 6 billion.

"The market remains buoyant and the activity levels are high. The sluggish capital markets are also supporting the PE activity... Till May, 2011, we had close to USD 4.5 billion worth of PE investments which was already 30 per cent more than 2010," Rastogi said.

Infrastructure, retail and consumer and technology are among the sectors that have seen good PE activity. In terms of deal value, infrastructure has so far emerged as favourite.

"Sluggish stock markets have in a way helped the PE investment activity - a number of companies which had filed for IPOs or were looking to raise money on public markets are now actively looking to raise money from PE," Rastogi said.

In recent times, Indian stock markets have been extremely volatile with a negative bias, especially with Foreign Institutional Investors (FIIs) pulling out their funds amid economic uncertainties. However, weak stock markets have negatively impacted PE exits.

"2010 saw record number of value of exits and 2011 to date has been slow especially as regards the exits through capital market listings," Rastogi said.

Even though PE activity is picking up, Rastogi said there are some concerns, especially inflation and its possible impact on various sectors.