Strategies for Private Equity Firms to Create Value in India

Posted by Dollar Sprout on June 1st, 2016

Pick up any day’s financial paper and you should be sure to come across an article about the PE deal or an entry of a new player with a huge corpus of PE fund. If you look at the perspective of the PE, the Indian economy is enhancing rapidly at a very faster growth rate. The future forecasting suggests that India has a very bright future in this field. There is a huge demand and a little supply so this gap is the benefit which most of the company make use of.

There is a great need for a 0 billion investment in the infrastructure alone that maintain the current growth rate according to the recent study conducted by the state reiterated this point of view. Thus the growth potential for the firms plays a very unimaginable role in India. It means that India is like red hot iron and has a lot of potential in their markets which can attract the PE investments. The gestation period in the few sectors such as the Bharti deal points out is also lesser. All in all the current financial eco-system is suited for better and more mature investments which the PE firms are able to offer.

Add to this the PE firms also have the capabilities that can add the immense value to the target as they try to squeeze out all the possible synergies and can create a potentially better financial company.

The strategies to extract the maximum value

The analyzing of the many India companies is getting larger and they have to employ both the generic as well as the non-traditional strategies to ensure adequate ROIs. The paper suggests possible strategies that will create the larger value.

Strategy that we should adopt is that of differentiating as we know. Differentiating is the most critical way for any firm to create value. PE firms could provide the latest technology and global expertise. PE backed firms can look forward to better and larger investments based on domain knowledge of the fund managers and the management of the Indian firms. The synergies would be a result of the current processes of the firm and the processes that the PE hopes to bring to it. This could result automatically in operational efficiencies.

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