The slowdown in economic activity, a volatile capital market and the
weak rupee have made it more difficult for private equity (PE) investors to exit from their portfolio companies.
Though the
PE sector has crossed the landmark figure of $100 billion across 5,500 deals since 1995, there has been only $25 billion worth of exits.
This means that in 80 per cent of investment, PE players have not got their money back, are strug-gling to find an exit and in some cases even written off their investment.
"Indian private equity has crossed $100 billion, but only $25 billion has gone back to the investors," says Avinash Gupta, leader (financial advisory) and senior direc-tor, Deloitte India. "This is a matter of concern, and India is worse off than many other markets in this regard."
Although there was PE activity in India since 1995, it gained momentum only by 2004-05 and reached its peak in 2007-08 just before the collapse of the global financial markets. While a large number of deals were registered during this period, many of them are struggling to find exit. "Post 2005, the situation has become scarier. Many investment between 2007-09 are stuck," said Deepesh Garg, a director with Mum-bai-based O3 Capital.
For the quarter ended June 2013, there was a slight improvement in exits. Investors were able to exit from 29 Indian com-panies compared to 21 exits in the same quarter of 2012, according to Venture Intelligence, a research service firm.
Courtesy: Mail Today
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