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PE investors 'cautiously optimistic' about India

The Hindu Business Line, New Delhi

May 29, 2012

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With no let-up in inflation, rupee depreciation and rising deficits, private equity (PE) investors are “cautiously optimistic” about investing more in India.

But, as the economic cyclical downturn corrects and policymakers refine policies, India's growth story is likely to stay with rebounding investor confidence, concludes a paper on private equity jointly prepared by Deloitte and Assocham. The paper was released by the Corporate Affairs Minister, Mr Veerappa Moily, here on Tuesday.

For India to grow at nine per cent, the role of private equity and Government-led initiatives need to go hand-in-hand, says the paper.

Fair and equitable

Mr Moily said the Government would pursue policy enhancements and also provide policy stability to attract more private equity investments.

"The Government is also mindful that private equity investors require stability of policies specifically with regard to taxation and other factors that impact investor returns," he said.

Mr Moily said fair and equitable treatment of local and international investors was needed with regard to taxation. Mr Gautam Bhandari, Managing Director, Morgan Stanley India, underscored the need for clarity in law, good corporate governance and sanctity of contracts to encourage more private equity fund flows into India.

Going forward, the sectors that are expected to be in favour (for private equity investments) are infrastructure, education, healthcare and renewable energy, said Ms Kalpana Jain, Senior Director, Deloitte Touche Tohmatsu India.

She also highlighted the tempering of valuation expectations.

Investors were likely to focus on far more value creation going forward, she noted.

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