Stock markets that have fallen for most part of 2008 are delaying private equity, or PE, transactions and also increasing the use of convertible instruments where an investment is converted into equity at a later date at the prevailing price. The delay is because both the companies and investors hold out for a better deal. For companies, a better deal means a higher valuation. For private equity firms, it means a lower valuation. Citigroup Venture Capital International (CVCI), the PE arm of Citibank NA, says it has been exploring potential targets in India for the past nine months, but has closed only two deals, both at the beginning of the year. The snag in most cases was the divergence between what the promoter wanted and what CVCI was willing to pay. By the time promoters adjusted their valuations downwards to reflect market movement, the market had fallen further. That’s a story that is playing out across India’s PE universe. […]