Private equity fund Apollo Global Management will invest $500 million in Indian steel pipe manufacturer Welspun group, marking the second biggest PE investment in India this year as firms take advantage of the rapid growth in Asia's third largest economy.

Private equity deals are rapidly growing in India, with firms such as 3i Group and Blackstone Group  scouting for new investment opportunities, and many others selling their holdings as valuations improve.

India saw 61 private equity buyouts worth $3.3 billion in the first half of 2011, up 21.6 percent from the same period last year. And private equity-backed M&A in the first six months of 2011 was the highest for the first half of any year so far.

Earlier this year, Bain Capital and GIC invested about $850 million in Hero Honda in the largest PE deal in India this year.

This is Apollo's second investment in India after it poured $100 million into satellite television operator Dish TV in 2009. The private equity firm is scouting for more opportunities in chemicals, metals and industrials, Sanjay Patel, senior partner at Apollo, said at a press conference.

Welspun plans to use the funds to expand its presence in steel and infrastructure and raise its stake in group entities, chairman BKGoenka told reporters on Wednesday.

'We have the vision of becoming iron ore to steel pipes business. This step is in that direction,' Goenka said. 'Apollo will not only bring the cash on table but will also provide their expertise in metals.'

Apollo will invest 13.05 billion rupees ($289.7 million) in the group's listed entity Welspun Corp through a preferential allotment of convertible debentures and global depository receipts (GDR), Welspun said in a statement.

It will convert the debentures in 18 months at Rs225 each and subscribe to the GDRs at the same price taking its total stake in the pipemaker to about 20 per cent, a move aimed at boosting its capabilities in the global oil and gas sector.-Reuters