Private Equity News & Analysis

INDIA: FINDING ITS PLACE

Demographics, rural-urban dynamics, regulations and traditional business ideals: these are the forces shaping the Indian private equity market. Siddharth Poddar examines the trends

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INDIA: THE IMPORTANCE OF PUBLIC EXITS

Public market sales and IPOs dominate
Volume (No of deals) Value* ($m)
Exit through buyback 4 52
Exit through secondary sale 7 38
Exit through public market sale 34 498
Exit through strategic sale 11 354
PE backed iPO 5 1,101
Total exits 61

NEED TO ADAPT
Many of the global firms investing in India have had a quiet year. In a country which does not often present private equity players with an opportunity to splash more than $200 million per deal, an adaptation of strategy is needed. Managers say vendors of large Indian companies are still not willing to cede control and that divesting assets by large conglomerates hasn't happened. If anything, in light of the financial crisis, Indian corporates have made an attempt to acquire businesses abroad as they find themselves in relatively good shape visà-vis counterparts elsewhere.

As a result, India still essentially remains a growth market and buyouts are not set to happen anytime soon, despite predictions to the contrary. “There is an Indianisation required if you want to deploy capital in India,” observes Manish Kejriwal, senior managing director at Temasek Holdings.

In the three to four years leading up to the crash of Lehman Brothers, private equity in India enjoyed a boom period. The real test for managers lies in the year ahead.