Corporate India to witness rise in PE deals by Q4

NEW DELHI: Corporate India is likely to witness a surge in private equity deals by the last quarter of current fiscal as inflation is likely to cool down and bulls are expected to be back in the stock market, as per PE deal tracker firm Venture Intelligence.

"Presently the promoters are adopting a wait and watch position as the public market has been beaten down. The ripple effect has deterred corporates from coming out with an initial public offer and same with the venturing into PE deals," Venture Intelligence CEO Arun Natarajan said.

"By Q4 of the CY 2008, the promoters will either decide to go public or go for private equity deals. This will invariable show a growth in the PE deals by December quarter," he added.

According to Venture Intelligence report on PE investment the rising inflation coupled with the current lull in the stock market has impacted the PE investment in India in the June quarter as it garnered 77 deals totalling USD 2.8 billion, down from the March quarter which saw 115 deals worth USD 3.6 billion.

The steep fall in the public markets has resulted in a marked decline in the number of Private Investment in Public Equity, Pre-IPO and late stage investments during the latest quarter, the report said.

Stating that the slowdown in the US and the rising Indian inflation has affected the corporate earnings, Natarajan asserted that PE firms would now show interest in companies which has deferred its IPO plans.

"The monetary tightening measures adopted by the country's apex bank will affect the consumer spending. Corporate earning is likely to witness a fall in the coming quarter. PE firms will be interested in investing in firms which are 2-3 years away from coming out with an IPO," he added.