New Delhi, Aug 16 : Developing stronger and sustainable business plans will help start-ups in receiving private equity/venture capital (PE/VC) funding, suggested a recent joint study by Assocham-Hammurabi & Solomon.
“After registering 26 per cent dip in fund raising by PE firms last year, that is, from $5.7 billion in 2015 to $4.2 billion in 2016, the year 2017 could be the one for consolidation, with PE/VC firms chasing a business having a strong business model with a focus on unit economics and profit,” stated the Assocham-Hammurabi & Solomon joint report titled ‘M&A landscape in India.’
The study also said that the Indian PE industry finds itself in the thick of opportunities to map a new route to re-emergence. “Factors like improving business sentiment, making the strategic benefits of PE familiar among Indian enterprises and a pro-reform government would accelerate re-emergence.”
The core area to focus on should be the PE/VC exits to generate returns for Limited partners (Lps) and free-up capital for further investment. “M&A activity and a strong primary market are expected to buoy the exits.”
The study noted that a strong alliance between stakeholders within the industry and the country’s economic objectives would be required for PE to deliver its full potential to the country’s economy.
“The key factors for success of private equity are suitable growth opportunities for the industry and supportive regulatory framework,” said the joint study.
Highlighting the role of PE investments in India’s economy, the study stated that the sector invested more than $103 billion between 2001 and 2014.
It also said that despite a drop in 2008, capital inflows from PE have been more reliable than those from other sources of equity funding, including foreign institutional investment, IPOs and equity issuances such as secondary offers and convertible instruments. IANS