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Global PE biggies setting up shop in India

Thanks to the economic boom and the rising consumer market in India, the action in the private equity space is increasing by the day.

Thanks to the economic boom and the rising consumer market in India, the action in the private equity space is increasing by the day. So, it’s not surprising that private equity funds are queuing up to enter India. Blackstone India and Apax Partners, which started investing in India this year, already have full fledged offices here. So do Baird Private Equity and Lehman Brothers. And looking at the growing potential in this space, Deloitte Touche Tohmatsu India has set up a dedicated private equity practice called Deloitte Corporate Finance Services India to address the needs of the growing private equity market. Now, two more big names from the PE world, both specialising in leveraged buyouts (LBO), Kohlberg Kravis Roberts & Co. (KKR), and Cerebrus Capital are setting up shop in India even though buyouts are not very popular in this market.

So, is this good news or bad news? “Neither,” says Alok Sama, Founder and President, Baer Capital, an investment management, corporate finance and wealth advisory company that has set up a private equity fund called Beacon India Private Equity Fund. “Most of these top buyout funds are currently not operating the way they do in the western markets. Their modus operandi is different in India. Leveraged buyouts are still not happening in India. Here, funds are investing largely to build companies.” Also, another hitch in the Indian market is that the skill sets required for leveraged buyout are not easily available; foreign players such as Blackstone India and Apax Partners make do with extremely lean teams here. Nevertheless, the potential is there of buyouts and players are bullish. BT’s attempts at contacting these PE firms proved futile.

According to Four-S Services’ fortnightly industry update, as the Indian market matures, these funds with deep pockets can create a market for their core business.

For now, they are just casing out the joint and waiting for larger opportunities.