Private Equity Deals in India May Drop to $5 Billion

Private Equity Deals in India May Drop to $5 Billion, TPG Says

Private equity investments in India may fall to as low as $5 billion this year, TPG Inc. and Bain Capital estimated. 

That would be less than half the $10.7 billion invested last year, based on estimates from the Asian Venture Capital Journal’s on Feb. 3. Distressed assets aren’t available in the South Asian nation after the government eased norms tied to delinquent loans, Puneet Bhatia, country head at TPG Inc., said at a private equity conference in Mumbai today. 

“As a theme, we love distress, but it has been challenging to get into distress,” Bhatia said. TPG, the buyout firm founded by David Bonderman, has more than $50 billion of capital under management, according to its Web site. “In India, there’s no distress.” 

Indian equities fell by the most on record last year, with the benchmark Sensitive Index dropping 52 percent. The South Asian nation has joined governments across the world in stepping up measures to stem the worst global slowdown since World War II. Its central bank in August began permitting banks to restructure loans for companies struggling to make payments, and extended the eased norms on Jan. 2. 

“The rollover of loans isn’t solving the problems, its only postponing them,” Pavninder Singh, a principal at Bain Capital, estimated. 

Unitech Ltd., India’s second-biggest developer, last month paid or won extensions on about 75 percent of the 25 billion rupees ($503 million) in loans due by March after struggling to sell stakes to investors for more than a year. DLF Ltd., the nation’s largest real estate firm, plans to extend maturity on 40 billion rupees of short-term debt, Vice Chairman Rajiv Singh said on Feb. 2. 

‘Fundamentally Flawed’ 

Private equity investments in India over the past few years have largely been in real estate companies, and based on “fundamentally flawed” valuations of land holdings, TPG’s Bhatia said. 

“The markets are shut and will remain shut for some time,” Atul Kapur, a managing partner at Mumbai-based Future Capital Private Equity Private Equity, said of the buyout market in India. Investors are going to take three to five years to exit bets made on real estate in India, he said. 

The slump in equity markets is also making it harder for the funds to unwind investments they have already made. 

“The exit process has been pushed out by a year or two,” Heramb Hajarnavis, vice president of principal investment area at Goldman Sachs Group Inc., said today in Mumbai.

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