India’s Private Equity Boom: Don’t Forget the Fundamentals

Private Equity has never been about ignoring the fundamentals: the commercial nuts and bolts of any project which are essential for the creation of real and long term financial returns rather than focusing on short term and often illusory market fluctuations.

The kind of sustainable, long term investments which most investors look for will, by parity of reasoning, inevitably attract increased levels of private equity investors, looking for long term and above market rate returns. So, in assessing the quality and character of India’s underlying economic activity, it is interesting to note the striking increase in private equity participation over recent years.

Take Blackstone, for example, which reported returns in excess of 30% on its Private Equity holdings on the subcontinent since 2011, and that’s the highest for any of its markets (the next being China, where the Fund booked returns in the order of 25%).

And scotching the previous glib perception that it might be easy to make money in India but difficult to get it out, Blackstone’s Senior Managing Director in India, Amit Dixit pointed out that “all of that has changed now, since 2014 there has been a good exit environment” leading naturally on to increased stake building by Blackstone on the subcontinent so that it no logner describes itself (in Dix’s words) as a “passive investor”.

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