large number of funds raised during 2006-07 which had to be invested /deployed during the next three to four years. However, given the economic downturn in 2008, the investing cycle period got extended by another two to three years. The PE fund-raising climate has indeed been moderated in the past two years driven by the global macro-economic scenario, challenges in exits with good returns and the overall deceleration of the India's growth momentum,” said Raja Lahiri, partner, transaction advisory services, Grant Thornton.
The need for larger funds has also reduced the attraction of mid-size funds. “PE funds are looking at slightly different investment models including listed assets, management buyouts (giving them control), mezzanine-type structures and potential for larger fund raise. These have led to the need for larger PE investments,” Lahiri said.
Interestingly, not all funds are strugglingand at least three of them launched earlier this year have seen some success in drawing in investors. This includes IDFC Alternatives which has raised $644 million reaching the first close of its $1 billion targeted. Piramal group's real estate fund, Indiareit, raised $50 million for its $163 million fund based on the data provided by VCCEdge.
“Funds with a successful track record in exits and continued support from original investors has made fund-raising for a few firms easier than others,” Rastogi of E&Y said.