Agency reports shows that Indian Private Equity & Venture Capital Association expects growth in the private equity (PE) and venture capital (VC) sectors to be subdued in 2013 owing to the slowing of the domestic economy.
The association expects exits by PE funds during the year if the stock market does well this year as predicted. There are many funds which have invested during 2005-06 and are looking for exiting their present portfolios. If there is good run in the stock market, then these funds will exit, a leading agency quoted an official from the association.
The official also feels that if the real economy doesn’t recover in the near future, private equity players may shift their investment to other countries which are competing with India for PE money.
The real economy should witness growth to attract PE funds. Unless it does good funds will be reluctant to commit money as they have to show return to their investors.
The official attributed the anticipated slowdown in the PE and VC sector in 2013 also to policy uncertainty on the tax front such as the GAAR ( General Anti- Avoidance Rule).
Despite the deferment of GAAR to April 2016, there is lack of clarity regarding the retrospective nature of its implementation, he feels.
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