New Delhi: Private equity (PE) transactions in India are likely to witness a significant decline this year as players have become cautious amid the ongoing economic downturn, global consultancy firm KPMG says.
“PE in India has become cautious as a result of the global meltdown and the implication for the PE industry is that we will see a lot less deals in 2009,” KPMG head of Private Equity Advisory Group Vikram Utamsingh told PTI.
According to data provided by consultancy firm Grant Thornton, private equity deals during January-February 2009 stood at 31 with an announced value of $0.54 billion, a significant dip from the previous years.
For the corresponding period (January-February) in 2008 and 2007, there were 83 PE deals valued at $2.98 billion and 69 PE deals valued at $2.06 billion respectively.
Explaining further Utamsingh said, “PE players have become cautious on deals primarily because it is difficult to determine the impact that the global meltdown will have on the operating performance of Indian companies over the next 12 months, thus making it difficult to value Indian companies.
Besides, the investment committees of foreign PE firms are looking more closely at the valuations for Indian deals, as they are not sure of another valuation correction and what could be the dollar denominated return given the devaluation of the Indian rupee, Utamsingh added.