due to lack of funds. He later joined US-based Gerken Capital Associates as managing director and India head.
Another PE firm, Arka Capital's plans to raise $400 million had to be shelved after a year as it failed to attract investors. The firm was launched by Rajesh Khanna, a former Warburg Pincus veteran; Rohit Kapur, a former KPMG corporate finance practice head; and Cyrus Driver, then head of Helix Investments in India.
Of the three, Driver has joined Switzerland-based private market investment manager, Partners Group, as managing director and India head. “It is no longer about the fund managers now. The LPs want to wait and watch because the environment is extremely volatile and they have not seen any fundamental changes happening. Investors usually wait before an important event and then take a decision accordingly. Since elections in 2014 will be a big event, we can expect more capital coming in after that,” said a senior fund manager.
PE firms, along with sovereign funds, have invested $30 billion in India between 2010 and August this year, as per data provided by consulting and audit firm Grant Thornton. “Clearly, 2012 had a decline compared to 2010 and 2011 largely due to the Vodafone and other tax/regulatory issues. If one goes by 2013 numbers to August and expectations for the rest of the year, we expect total investments in the same ballpark in 2013 as in 2011/2010 which was $8 to $9 billion,” said Mayank Rastogi, partner, private equity and transaction advisory services, at consulting firm Ernst & Young (E&Y).
“The activity in the mid-market space and the new money capital raise have been impacted by lack of capital investments for expansion and general slowdown in demand in a number of sectors. Deals are being more driven by need for liquidity of existing investors and leverage considerations,” he adds.
Along with difficulties in raising fresh capital, PE funds also continue to struggle with profitable exits which have been limited by the volatile equity markets and the inability of companies to meet their growth targets against the backdrop of a weak economy.
“There were a