Data from media reports indicate that 12 private equity funds are raising at least $6.6 billion for investment in Asia.
Reports indicate that a substantial part of this amount would be invested in Indian businesses. The financing by private equity investors would meet the funding requirement of Indian companies at a time banks lending is slowing down.
Industry sources feel there is tremendous opportunities for private equity and private debt in India. Public markets are very shallow, and the banks are undercapitalised.
Through non-bank financial companies (NBFCs), private equity investors finance business ventures in India. This is because NBFCs are viewed as more flexible than banks. NBFCs can give loans to buy land, to refinance real estate debt, or for a company to buy out a private equity investor, areas that banks find tough to lend to.
Top private equity funds can make internal return rates, a measure of profitability, of 25 percent, but returns from credit funds can be as low as 9 percent. It is learnt that KKR & Co is a leading private equity fund, among others, in India.
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