The Times They Are A-changing...
Some players believe that the recent transactions indicate the mood is changing. And PE funds with bagfuls of dollars targeted at India may finally be ready to graduate from just providing equity finance to helping local companies expand in India and abroad — what is dubbed as growth capital in PE parlance — to headline grabbing buy-outs with the lure of huge returns.

ICICI Venture Managing Director and CEO Renuka Ramnath who has concluded buy-outs in India and overseas — including the takeover of US-based Radiant Research in a joint venture with Wockhardt — is a believer. “In numbers and volumes, growth capital is still the larger piece but buy-outs are definitely on the rise,” she says. “There are several Indian companies below the radar where promoters want to move on to newer industries. For instance, we’ve seen a lot of transactions in the auto components sector.”

Overseas acquisitions by Indian companies are also low hanging fruit for private equity, says Ramnath, referring to the flurry of cross-border mergers and acquisitions (M&As) by Indian companies. In her opinion, the younger generation of Indian businessmen and entrepreneurs is keen to make its own choices; they may exit from existing ventures thereby opening up further opportunities for buy-outs by PE players. Ernst & Young’s national director for transaction advisory services Jayesh Desai agrees. “The Indian business environment lacks transparency and is still managed by promoters largely,” he says. “However, several things are changing. For instance, promoters are keen on the real estate market and some see more value there than the original business of their firms, which may open up new opportunities for buy-outs.”