Pe scenario in india

Private Equity scenario in India . .

IntroductionPE industry is about a decade old (1999) .

Benchmarks -2004 The total deal value crossed 1.45 bn USD. (for 1st

time)

2007 Peak deal value of 14 bn USD.

2010 Overtook China (in terms of deal value) for a short while

2012 It currently ranks 6th.

4 sequential steps in PE

1.

•FIND

2.

•INVEST

3.

•HOLD

4.

•EXIT

The million $ Q’s .

1.What determines the rate of return on Exit ?

2.Extent of influence of – Fund manager on the exit strategy.b. The sector on the exit strategy.c. Life of the fund.

3. Which type of exit generates best return and why

4. Do ‘promoter preferences’ on Exit , matter ?

5. If yes , then how the conflict is resolved ?

6. Is there any connection between entry and exit type ?

Uncontrollable

1. The factors that prevail in the system and are beyond our control.

2. Eg. Global economic slowdown in 2009 .

Controllable

1. The choice of sector .

2. Selection of firm.

3. How much to invest.

4. Entry strategy .

5. Type of exit .

6. When to exit.

Answers

How Indian market was Risky for PE funds ?

• Political and regulatory uncertainty

• Weak corporate governance

• Family owned businesses

• Difficulties in exiting through IPO

• Compliance issues

Returns from Indian PE

Sensex return v/s PE return

2003-2010

PE returns across Asia and other countries

Positives of PE

• PE helped mid market companies deliver professional services.

• Direct impact on – business model , corporate governance , professional talent management of portfolio companies.

• PE enhanced company’s reputation with banker’s and capital markets.

Conclusion

• The PE industry in India is as old as the life span of a typical PE fund.

• Nearly 30% of PE deals likely end up generating negative returns.

• High cost of entry.

• Positive future.