Baring Private Equity Partners expects more Indian firms to tap private equity as markets and economies deteriorate further, limiting firms' ability to raise funds for expansion, a partner at its India unit said.
Subbu Subramaniam told Reuters in an interview the credit crisis was also giving private equity firms bargaining power, enabling them to target listed and larger firms.
“I can see that there is more pain to come in U.S. and because of that here also,” Subramaniam said.
“(Private equity's) future is bright … If the stock price goes off, the promoter does not like it. But anybody who has got money and likes the business, he will be happy to buy. We think we are in that position.”
Indian companies have in recent years embarked on ambitious expansion plans, bolstered by plentiful cash and low interest rates as the economy grew nearly 9 percent annually.
But the global credit crunch has taken its toll and with the stock market falling more than a half, many firms have deferred share issues.
“Where is the option? It's a choice among no choice. I am just at the right place at the right time as a private equity investor with money,” Subramaniam said.
Baring closed a $550 million fund targeted towards Indian mid-sized companies in March and has already committed a tenth of it, Subramaniam said.
It is looking to invest in service businesses founded by first-generation entrepreneurs, preferably in healthcare, financial services and IT/back-office firms.
Separately, Baring Private Equity Asia earlier this year raised nearly $1.52 billion for a fund targeting mid-sized growth and its chief executive said in May up to half of it would be invested in India.
Private equity and venture capital investments in India rose to $9.7 billion in the first nine months of this year from $9.5 billion a year earlier, according to Venture Intelligence, an Indian deal-tracking firm.
“It continues to be at the same level, except that earlier it would have been in an unlisted company, today it may be in a listed company,” Subramaniam said.
Source: Reuters