Business OpportunitiesSebi should simplify norms
Business Standard / New Delhi December 30, 2009, 0:33 IST
Bain Capital is one of the world’s leading private alternative asset management firms whose affiliates manage approximately $65 billion in assets. Amit Chandra, earlier with DSP Merrill Lynch and New Silk Route Advisors, leads the firm’s India practice.
What is your expectation on fund-raising? Will it be easier to raise funds this year?
Fund-raising for PE funds will continue to be a challenge in 2010 as LPs (limited partners) seek to rebalance their portfolios and wait for distributions to come through on prior investments. While the going will be tough for the industry as a whole, it will be relatively better for industry leaders with established track records and funds that are more focused on themes that investors seek greater exposure to.
Is there any sector that you are bullish on?
Infrastructure in India requires substantial funding and will continue to take the lion’s share of deployment by the PE industry.
Will it be easier for PE funds to exit investments?
With Indian markets being buoyant, PE players will continue to be in a good position to harvest investments at reasonable valuations.
What are the challenges that private equity (PE) funds are likely to face next year?
The Indian PE industry faces two big challenges. First, competition from the capital markets, given that even relatively less mature companies can access public markets in India, and are in fact encouraged to do so by regulators and the broader community here, unlike in a lot of other countries. Two, it would be great to see improvements in Sebi’s regulatory framework to make it easier for PE investments in listed companies, given the fact that PE provides stable long-term capital with the additional benefit of improved governance and value addition. The two improvements that are urgently needed are raising the threshold of open offer for financial investors to 25 per cent and permitting shareholder agreements that have essentially non-control minority protection clauses, without construing that to be control.
What’s your expectation on valuations and deal size?
PE deployment might see some improvement in 2010 over 2009 but the industry is over-built with the number of players being far in excess of the size of the opportunity. Therefore, valuations will continue to pose a big problem, as will getting reasonable number of deals done for each player.