I think both the P/E and the public market will be very critical to finance the power requirement and if you look at the overall numbers for power in India, they are just crazy. You have about 440,000 MW shortfall if some of the numbers are to be believed, it is a USD 140 billion investment. Even with a debt to equity ratio of 4:1, you are still talking USD 30 billion of equity that could take up every single fund that has been announced in India plus a large chunk out of the public markets and the IPO markets and still remain insufficient. That is the equity side.
The ECB market in any case will only be able to support the debt aspect, which we have already; if you look at these numbers you are talking about very large debt commitments also. So I think the demand-supply for capital in the power sector will remain skewed for sometime and the demand for capital will far outstrip the supply of capital.
...I think it will be pretty simple for you to figure out that almost everybody who is in the market is discussing with large credible private equity firms today because they need pre-IPO anchor. So I think the demand is pretty strong for capital write down.
Arun Natarajan is the Founder & CEO of Venture Intelligence, the leading provider of information and networking services to the private equity and venture capital ecosystem in India. View free samples of Venture Intelligence newsletters and reports.