The Indian private equity sector is unlikely to be affected by the recent turmoil in the global credit markets, a report said.
The sector would instead continue to be an important source of capital, the report by The Boston Consulting Group (BCG) and the IESE Business School of the University of Navarra in Spain said.
The source of this superior performance is a set of distinctive organisational capabilities that differentiate the top private-equity performers from both their public and private rivals, it said.
According to the report, the three capabilities include networked access, domain expertise and past operational improvement.
On networked access, the report highlighted the extensive networking with industry insiders in the sectors where the private-equity firms operate while on domain expertise.
The capacity to quickly implement improvements that turn around their portfolio companies is another capability, the report said.
Commenting on the opportunity in India, BCG partner and director Saurabh Tripathi said, “Richness and diversity of Indian market allows for specification of private equity funds along the lines identified in this report – be it expertise in domain, operational improvement or private networks.”
“India has a much higher presence of private equity than other emerging markets and it will be crucial for some of them to specialise on above lines. Operational improvement lever is not fully explored as a differentiation in India.”
The report is based on extensive analysis of a variety of data sources, including a unique BCG-IESE database of some 1,750 private-equity deals that took place between 2000 and 2006.
Source: Economic Times