Why PE funding in India is going through a churn

Given the economic slowdown, a weak rupee and an uncertain policy environment, it's not a surprise fund managers are carefully weighing their investment commitments. Fund managers also say the fall in the number of investable businesses is leading to higher valuations, which is impacting their returns on investment

Private-equity (PE) funding in India is going through a churn with fewer companies attracting higher capital from investors. Data from research firm VCCEdge shows there were 292 PE deals worth $9.2 billion in 2013 . This represents an eight per cent rise in value and a 17 per cent drop in volume from the previous year.

What does this indicate? Some analysts feel this shows the number of businesses worth investing in is shrinking. Given the economic slowdown, a weak rupee and an uncertain policy environment, it's not a surprise fund managers are carefully weighing their investment commitments. Fund managers also say the fall in the number of investable businesses is leading to higher valuations, which is impacting their returns on investment.

Private-equity (PE) funding in India is going through a churn with fewer companies attracting higher capital from investors. Data from research firm VCCEdge shows there were 292 PE deals worth $9.2 billion in 2013 . This represents an eight per cent rise in value and a 17 per cent drop in volume from the previous year.

What does this indicate? Some analysts feel this shows the number of businesses worth investing in is shrinking. Given the economic slowdown, a weak rupee and an uncertain policy environment, it's not a surprise fund managers are carefully weighing their investment commitments. Fund managers also say the fall in the number of investable businesses is leading to higher valuations, which is impacting their returns on investment.

VIMAL SINGH

PGDM II (SEM)