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January 24, 2004

Exits, aggressive entry valuations to be themes of '04: Ashish Dhawan

As the stock markets continue to heat up in 2004, private equity investors--at least, the "disciplined" ones--will focus on taking their "chips off the table", according to Ashish Dhawan, Senior Managing Director of ChrysCapital. "For example, venture-backed companies such as Patni and Daksh are already slated for IPOs this year. This first wave of private equity exits will solidify the track records of selected blue-chip funds," he says in his column accompanying Business Today magazine's cover story on the VC industry.

A corollary of a booming stock market and economy is the rise in expectation among entrepreneurs and CEOs when it comes to valuing their companies. "For private equity investors, aggressive entry valuations will pose the most significant challenge in 2004," Dhawan says.

Dhawan sees the increasing specialisation among private equity funds as a welcome sign. (He cites JumpStartup's focus on cross-border technology deals, GW Capital investments in emerging domestic service businesses, and CDC's pioneering of management buyouts and corporate carve-outs). "The increased specialisation translates into accumulated expertise that funds can bring to their investments and prevents lemming-like behaviour," he says. Dhawan is however skeptical about the prospect for investments in operational turnaround and LBO transactions.

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