Panel Discussion on "New Frontiers in Private Equity" Launches Asia Business Series

Asia Society India Centre (ASIC) convened a panel discussion on "New Frontiers in Private Equity" in Mumbai on June 21, 2007 to launch its Asia Business Series. The series is a platform for talks, discussions and debates with leading minds from the corporate world and government on issues and opportunities that impact business in the region.

The panelists included Renuka Ramnath, Managing Director, ICICI Ventures; Harsha Raghavan, Executive Director, Goldman Sachs; and Neeraj Bharadwaj, India Head, APAX Partners.

Renuka Ramnath initiated the panel discussion by stating her optimism for private equity investors in India. She mentioned that in as late as 2001 investors would walk up to her and ask her what private equity meant. But now the domestic investment scenario had undergone a sea change with private equity becoming the buzz word in the financial markets. She also mentioned that while the market was sluggish post-9/11 it had picked up and sustained its momentum ever since. She however also cautioned that the flood of money did not mean that the private equity investors could take the entrepreneur for a ride. There was still a lot of background research which went into making the investment. On China, Ms. Ramnath said that the market and the investment opportunities were vibrant and that one did not face any difficulty in making investments on perceived account of lack of regulatory authorities and transparency in business transactions. She did mention that the nature of family owned businesses in India made it more challenging to make investments or exit the companies but that by and by the entrepreneurs emerging now were younger and less emotionally wedded to their companies.

Harsha Raghavan said we must be more discerning about the meaning of private equity as it had come to be known in the Indian context. He clarified that currently all shapes and deals exist under the umbrella of private equity. He did discern the difference between the Indian private equity market and the global trend for the same. He also said that in the US companies were being taken over—so a lot of buyouts were being witnessed in the economy. In India the phenomenon of buyouts had yet not materialized. He said that there was hype around the fact that the markets were overcompetitive. Mr. Raghavan also mentioned that he did not see any difference between the strategic or the financial aspect of investment decisions. He said they went hand in hand and hence did not see much weight to the argument that companies were now trying to consciously make strategic aka long term investments as opposed to purely financial decisions. He also said that one sour deal cannot hope to impact all the deals. It will be focused on but it cannot upset all potential deals. So he ruled out a deal going wrong having a veritable ripple effect on all others. He said that as markets change private equity funds and hedge funds would change to suit the order of the day.

Neeraj Bharadwaj said that in the last 10 years the growth in private equity had been immense. He pointed out that contrary to the widely held belief that private equity stripped assets and resold companies, a large number of companies with private equity investments have shown an annual growth rate of 20% or more and have created jobs. He also said that the Indian market is less competitive than the US market which has seen an increase in global mergers and acquisitions lately. He said that the way companies were structured in India (family-owned) made the company iapprehensive to private equity investments/bids. He went on to say that people were actively, now, considering acquiring assets abroad—a trend which we have got to witness only recently. This was mainly being fueled by the change in the aspirations of Indian entrepreneurs who are now trying to position themselves globally. On China, Mr. Bharadwaj mentioned that the economy was still in an expansionist mode although it was much easier to exit a public market as opposed to say the Chinese styled economy. He capped off his remarks by saying that private equity companies would need to be proactive in being more transparent so as to dispel distrust around private equity firms.

Asia Society is the leading global organization working to strengthen relationships and promote understanding among the people, leaders, and institutions of Asia and the United States. We seek to enhance dialogue, encourage creative expression, and generate new ideas across the fields of policy, business, education, arts, and culture.

Founded in 1956, Asia Society is a nonpartisan, nonprofit educational institution with offices in Hong Kong, Houston, Los Angeles, Manila, Melbourne, Mumbai, New York, San Francisco, Shanghai, and Washington DC.

# # #