PE sector expects better days ahead
Nearly 68% of the respondents in a Bain and Co. survey expect GDP to grow at 6% or more by March 2016
New Delhi: The private equity (PE) sector expects business environment to improve under the new government, according to a PE Investor Confidence Survey by Bain and Co., a global management consulting firm.
Nearly 90% of the 29 PE investors surveyed said they expect the new government to “somewhat" or “significantly" improve their ability to operate in sectors of interest.
“The survey shows the PE investor community is more upbeat now about growth in PE deal value and volume in the coming months, amid the improving business climate," said Arpan Sheth, head of Bain and Co.’s India Private Equity consulting practice.
Lack of clarity and uncertainty around regulation and taxation were seen as the biggest impediments to PE investment in India, with 50% respondents noting it as a major challenge.
Policy paralysis/poor governance and promoters expecting high valuations were the other challenges on the list.
Curbs on foreign direct investments and corporate governance issues also remained a significant challenge for PE executives.
The PE sector thinks that clarity in regulations and taxes, including retrospective taxation, can help accelerate investment in India in the short term. Implementing the goods and services tax (GST) and speedy clearance of big-ticket projects are other changes the government could bring about to boost investment.
PE firms expect the government to invite their participation in infrastructure, energy, healthcare, education and other sectors. They also want the government to make it easier to acquire troubled/distressed assets, and strengthen the governance and legal framework to protect the rights of minority shareholders.
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