October 2009
« Sep   Nov »

Contact us

India may lead global private equity recovery: KPMG

The domestic and international private equity players see India as the second most attractive destination after China and feel that the country may lead the global PE recovery, according a survey.

As many as 33 per cent of investors, who participated in the survey, ranked China as the most attractive market, followed by India (29 per cent), other emerging markets (19 per cent) and developed markets (20 per cent).

“India offers immense opportunities for PE investments and India will likely be at the forefront of a global PE recovery,” said a survey by research firm KPMG.

It said investors find India attractive as a PE destination because of its robust economic growth, tax environment, corporate governance and investment structuring.

“The next 12 months should be viewed as an opportunity to build value in portfolio terms and show that PE is an integral part of India's future,” the survey added.

It projected 2010 to be the year of consolidation with focus on portfolio nurturing, fewer new deals or fund raising, smaller investment sizes and fewer exits.

The KPMG survey, conducted along with Stanford University's Shorenstein Asia-Pacific Research Center, covered 40 General partners (GPs) and Limited Partners (LPs). Broadly, GPs handle investment operations directly for PEs, while LPs invest in them.

KPMG said Indian public markets have recovered significantly since August 2009, and initial signs are indicating that there is considerable amount of liquidity in the market from institutional investors for IPOs.

Exit options for PE funds include initial public offering, public market or strategic sale.

On India's hurdle rates (the rates of return above which the GP starts to earn the carried interest, about 8 per cent), the survey said they were in line with developed country averages.

“This is unexpected; because Indian PE should earn higher returns for developing country risks than developed country PE. We would, therefore, expect hurdle rates to be higher than developed country rates.” it added.

Source: Economic Times

Comments are closed.