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November 10, 2008

"Climate for PE investments more attractive"

Sandeep Singhal of Nexus India Capital, which has recently closed its second fund, writes in the Economic Times how VC investors are now facing far less competition.
Short-term earning hits from capacity expansion or MTM hedging losses, or selling due to redemption pressures, are less relevant for PE. Marginal and less value-added capital has departed and a more rational and less competitive investment environment has led to valuation expectations become more reasonable. Consumption and business investment, although moderated, still remain at very attractive levels.

Large opportunities do exist in the domestic market, and in exports, with greater global integration and trade flows. A young population with high aspirations, both in urban and increasingly in rural markets, India is a great destination for companies with ‘Bottom of the Pyramid’ solutions.

The strength and availability of world class talent, enhanced by NRI returnees and managers with global exposure, give Indian companies a talent advantage in global markets. A traditionally tough domestic environment gives Indian businesses an edge over their counterparts in developed countries facing the global challenges. Companies that execute well in tough times become market leaders when the economy
improves.

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. Email the author at arun@ventureintelligence.in