Capital & Finance

FDI & FII - Indian Landscape

Private Equity is the capital that is not quoted on a public exchange. It consists of investors and funds that make investments directly into private companies or conduct buyouts of public companies that result in a delisting of public equity. Capital for private equity is raised from retail and institutional investors, and can be used to fund new technologies, expand working capital within an owned company, make acquisitions, or to strengthen a balance sheet. 

Private equity experts and investors in India describe a unique developing market where even with bountiful capital and few opportunities for anything but minority shares the sector is profitable and a key to harnessing the country\\\\\\\\\\\\\\\'s tremendous entrepreneurial energy.

Following are the observations for this sector based on a report by Price Waterhouse Coopers:

The following trends are to prove significant in the year 2013:

• During 2012, there were clear signs that Indian promoters are willing to be pragmatic. This will potentially create opportunities for PE funds to look at businesses, which have a good operating model, but have suffered owing to over-ambitious expansion, and/or poor capital structures.

• The global crisis meant that in some cases, global strategic investors may be looking to monetise their Indian assets.

• Relaxation in the FDI regime, particularly in retail businesses, is expected to spur investments in the sector. From a PE perspective, sectors which support retail back-end will be of interest. In particular sectors such as logistics and warehousing, food processing and the services segment in general should be of interest to PE funds. Apart from investing activities, a number of PE firms will be focussed on raising their next round of funds, and this will be an indicator of how the global investment community looks at India. From an Indian fiscal standpoint, there has never been a greater need for foreign investment in the country.

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