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March 30, 2016

Why, Despite Reporting Record Investment Figures, Private Equity in India Needs Structural Changes

Even though Private Equity investment figures in 2015 surpassed the previous high (of 2007), the expert panel at the Venture Intelligence APEX'16 PE-VC Summit felt the PE segment still faces a challenging environment and that "selectivity" will be keyword for such investments in the months ahead. Speakers on the panel included Pradyumna Nag, Director, Prequate (moderator); Arvind Malhan, Partner, New Silk Route; N.K.Dilip, Partner, Tatva Legal; Sunil Kolangara, Director, Ascent CapitalSrini Vudayagiri, Partner, Peepul Capital

"The days of playing the Valuation Arbitrage game - of investing in a private company and it taking public at a higher multiple and looking intelligent in the process - are gone. The only scope for such an arbitrage today is to spot a sector early enough," commented Sunil Kolangara, Director, Ascent Capital. "Passive investments are also a thing of the past - PE investors, including those who hold minority stakes, are much more hands on with their portfolio companies these days," he added.

Sunil Kolangara, Director, Ascent Capital

With executing exits continuing to be challenging and any slow down in the public markets affecting valuations in the PE market, fund managers are going to be very selective in making investments in the months ahead, Kolangara felt. Echoing the sentiment, Arvind Malhan, Partner, New Silk Route, said that "Selectivity, Specialization and Superior Returns" would be the key areas of focus for PE investors. He highlighted how various funds are choosing to specialize in segments like distressed assets (especially with many banks restructuring their non-performing assets), mezzanine funding, buyouts, etc.

View the full panel discussion on YouTube:

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The Venture Intelligence APEX Private Equity - Venture Capital Summit is  an  annual one stop update point for the latest trends affecting the Investor-Entrepreneur Ecosystem and to enjoy great networking opportunities.