The collapse of the big guns of global financial services sector could well turn out to be a gain for the private equity (PE) industry in India.
Thousands of professionals who were employed by these firms will now be chased by the PE firms, which are already facing an acute shortage of skilled professionals.
At present there are over 366 PE firms in India while three years ago the number stood at around 100. The industry witnessed a robust growth in the last few years with investments going up from $2 billion in 2005 to close to $17 billion in 2008.
“The huge expansion in such a short span of time has led to a dearth of trained professionals in the sector,” said Baring Private Equity Partners (India) MD Rahul Bhasin. Actis partner JM Trivedi added: “There is a shortage of people with right skill sets and adequate experience in the industry. This has happened primarily with the entry of a large number of new players and funds in the country.”
Those who track PE firms say the shortage is mainly at the senior level where professionals are required to negotiate deals, work on investments and transactions. “The industry lacks strategic consultants who are able to facilitate business deals on their own,” said an industry expert.
Until now, most skilled professionals with a financial background opted for jobs in investment and retail banking. Now, with the recent uncertainty in the financial sector, PE firms are looking to tap the talent.
“The industry is looking at recruiting senior persons from investment banks and consultancy firms which would help battle skill shortage to some extent,” said Mr Trivedi.
Even premier business schools would prove to be a happy hunting ground for PE firms. So far, investment banking and consultancy firms were the first choice for most graduates of the Indian Institutes of Management (IIMs) as they paid hefty salaries. However , the trend is expected to change in next year’s placements.
PE investments clocked $2.8 billion in the first quarter of the current financial year, even as the PE deal activity in terms of number of deals went up only marginally. There were 77 deals signed as against 74 last year during the same period, according to data compiled by Venture Intelligence.
Source: Economic Times