The credit crunch in the wake of the global financial crisis has thrown up fresh opportunities for private equity (PE) players and sovereign wealth funds (SWF) to invest in India in a big way.
With traditional sources of cheaper credit drying up, corporates are increasingly looking at raising funds from PEs and SWFs. Sources said that companies, like infrastructure, which are yet to tie up funds for their expansion plans, are in talks with PEs and SWFs to meet their requirements — be it long-term debt, working capital or equity infusions.
One such company is JSW Energy, which is pursuing a major investment programme of Rs 11,000 crore for its power business. JSW Energy was earlier planning to raise up to $1 billion through an IPO, it did not materialize due to sluggish market conditions.
Said JSE Steel finance director Seshagiri Rao, ‘‘JSW Energy is exploring options of tying up funds from PE investors or sovereign funds for its expansion plans. Talks are currently on with some firms.'' A financial expert from a leading firm said he expected hectic activity in the corporate world with respect to funds infusion by PEs in the coming months.
Sources said large PEs like Providence Equity Partners, Hamilton Lane, AXA Private Equity, TPG etc are said to be doing the rounds of medium-to-large corporates to provide funding. Among sovereign funds, Abu Dhabi Investment Authority, Kuwait Investment Authority, Qatar Investment Authority from West Asia are being approached by Indian firms.
AXA Private Equity director L N Sadani told TOI: ‘‘In the last two years, valuation expectations of promoters had risen, posing a stumbling block for PEs. The correction in valuations now has created a viable option for PEs to invest in India, at least for the next 12-18 months.”
AXA PE has invested over $200 million over the last two-and-a-half years in India. Said Dilip Kothari, founding MD and head of PE business, J M Financial: ‘‘Since cost of borrowing has gone up, PEs provide a window of opportunity for corporates to tap into. Track record of companies which have offered lucrative exit options will be the key parameter for attracting investments from large PEs and sovereign funds.”
Source: Times of India