1. India no longer needs selling: According to Alok Gupta, managing director and chief executive officer of Axis Private Equity: “Emerging markets are preferred by investors, and India and China are favourites, so very little time now is spent explaining ‘why India’.”
2. Consolidation will happen: There are more than 400 India-focused private equity managers, delegates said. Far too many. One fund manager referred to the “walking dead” that have either raised capital but haven’t been able to invest, or haven’t been able to successfully raise their maiden funds. Consolidation is expected through the inability of certain GPs to continue in business.
3. Indian capital should share in Indian returns: Domestic institutions, particularly insurance companies such as the Life Insurance Corporation, need to be allowed greater freedom to invest in domestic private equity funds. Till then, India will continue to see foreign institutional investors making healthy returns from Indian private equity, while domestic savings sit idle.
4. Rural India is where it’s at: Agriculture aside, there are plenty of other opportunities to tap into in the rural areas, where the majority of India’s population lives. These include financial services, basic retailing and utilities to name a few. And with rural spending on the rise, “private equity firms cannot afford to ignore the opportunity set that rural India presents”, according to Anubha Shrivastava, managing director at CDC Group.
5. India needs private equity more than private equity needs India: Indian regulators need to acknowledge this and facilitate the inflow of private equity capital into the country, said Deepak Parekh, chairman of Housing Development Finance Corporation, India’s largest mortgage company.
6. The wait for buyouts will continue: In a live poll, a clear majority of delegates said they were pessimistic about the prospects of buyouts in India. Meanwhile, the definition of “control” in Indian private equity is still a point of contention. Bruno Seghin, a partner at Navis Capital, gave his view: “To me, there is no clear definition of control; you only know when you don’t have control.”
7. You can’t get away from infrastructure: In the last few years, no discussion on Indian private equity has been complete without the mention of infrastructure. The same was true of the PEI India Forum. Panelists and delegates alike believed that infrastructure projects and infrastructure-enabling companies will continue to be key sectors for investment in the country for a long time to come, with key sub-sectors including power, road, ports, airports, logistics and telecoms infrastructure.
8. There’s too much money chasing too few deals now, but this won’t be the case forever: There is a clear surplus of capital right now in India. However, JM Trivedi, a partner at Actis, says the Indian market will continue its rapid expansion and reach the point where it is able to absorb this amount of capital.
9. Poor corporate governance is not specific to India: Rakesh Jhunjhunwala, partner at Rare enterprises, said: “Corporate governance is all about attitudes and bull markets.” In his view, India has sound corporate governance, but no amount of governance is sufficient to prevent individuals from indulging in fraud if they want to. And Fraud is easier to commit in the hysteria a bull market provides.
10. Foreigners must ‘Indianise’ to do well in India: “There is an Indianisation required if you want to deploy capital in India,” observed Manish Kejriwal, senior managing director at Temasek Holdings. Those focused on large buyouts elsewhere, for example, will need to consider smaller deals and non-buyouts in India.