year, according to Grant Thornton. Pharmaceuticals, healthcare and banking and financial services together received 42% of the total PE investments.
However, the opening of the public markets is a moment of joy for few. “Only companies of a large size and strength will be well received at the IPO,” said Kohli of ChrysCapital.
“Exits in mid-cap companies can take a while as some of these tend not to be very liquid,” said Devinjit Singh, managing director at Carlyle India Advisors. “Limited partners or investors need to see successful returns from India,” Singh added.
“There will be pressure on exits as 2006 investments will have now reached seven years. Given that the life of a typical fund is eight to nine years, these investments will have to be exited in some way, perhaps even at a loss,” said Utamsingh of KPMG.
Though the economic environment is improving, investors are still wary of the way ahead. “Policy changes are required in the infrastructure sector for attracting capital, a key imperative for growth. What the government does in the next six months will be critical,” said Archana Hingorani, chief executive officer and executive director at IL&FS Investment Managers.
Another interesting (and growing) trend in 2013 will be secondary deals and limited partner (LP) to LP change of hands. “In funds which are under water on investments, the LPs on those funds will look to exit the funds by selling to other LPs at a discount. These deals will take place outside India and so will not really be tracked in the Indian market. But if they happen, then the new LPs will provide a lease of life to the funds to continue holding on its investments and try in some manner to generate better returns,” Utamsingh said. “In 2012 so far, 25 out of 94 exits were through secondaries, ie, PE to PE transactions. We can expect this trend to continue as there is a very large pool of good portfolio companies and the larger PE funds are targeting these companies for transactions.”
PE firms find the Indian consumer growth story intact. “Domestic consumption sectors like healthcare, pharmaceuticals and