India’s private equity future explained

Author: | Published: 8 Jul 2011

Lawyers in India expect slow development of traditional private equity models in the domestic market.

Speaking at IFLR’s India Outbound Investment Forum yesterday, Blackstone India’s senior managing director and chairman, Akhil Gupta said regulatory restrictions on debt raising in India and cultural hurdles had hindered take-up for highly-leveraged M&A deals, such as leveraged buy outs (LBOs).

A preference among promoters for a diversified business portfolio rather than a focused business approach had also had an impact, he said.

DSP Merril Lynch’s managing director and investment banking vice chairman, Bala Swaminathan said LBO deals were difficult to execute in the Indian market due to a lack of available bank credit. The scarcity of automated business processes also made it challenging for new owners to run complex business processes.

LBO situations are a viable option for high-tech target companies in which it is relatively easy for new management...