Industry sources feel that private equity investors in the country are going through a challenging period.
It is learnt that the return on investments made after 2006 has not been very encouraging even after about six years.
Moreover, funds are finding it tough to exit from portfolio companies in an economy that is experiencing slowdown. This is forcing firms to cut down on expensive human resources as they don’t need people for investment purposes, but require talents to manage assets and exit from them, industry sources said.
PE investments declined by 15 percent to Rs 48,885 crore in 406 deals in 2012, data from the Chennai-based researcher Venture Intelligence shows.
Moreover, investors in PE firms, better known as limited partners, have been allocating less capital to India-centric funds, shifting focus to other economies like Brazil. Some fund houses like DE Shaw are said to have scaled down their operations in country. And some like Arka Capital reportedly shut operations after finding it difficult to raise money.
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