Deepak Parekh, one of the most respected statesmen in the Indian finance industry and the chairman of Housing Development Finance Corporation, India’s largest mortgage firm, today stressed the need to clear the regulatory hurdles faced by foreign private equity firms to allow them to put their capital to use in the country.
Delivering the opening keynote at the PEI India Forum in Mumbai, Parekh said Indian regulators needed to acknowledge that Indian companies have a lot more to gain from the inflow of private equity capital than just the capital itself.
“India needs private equity more than private equity needs India,” Parekh said.
India needs private equity more than private equity needs India.
Parekh pointed out that as of August 2009, the website of the Securities and Exchange Board of India states that 54 venture capital firms have applications pending approval – some of whom have been waiting since 2005. There is a need to streamline approvals, Parekh said, adding that regulators must have a clear yes-or-no policy within a set time frame. Such inefficiency “does no good to our reputation or credibility”, he added.
Parekh also said the greatest hindrances to private equity investing in India are rising valuations and rising expectations of the promoters of companies. He said there have been several instances where potential private equity deals have fallen through simply because of unrealistic valuations.
It is equally important for private equity funds not to succumb to pressure from promoters in an attempt to sign “marquee deals”, he said. There are many opportunities to make money in India but trying to make too much money in too short a time will always have issues, he noted.