PE firms failing to tap digitalisation: PwC research

MUMBAI: Even as mergers and acquisition (M&A) activity in the Indian market sees a northward trend, going digital may just bring the next spurt of growth for the private equity players, according to a new paper by Strategy&, PwC’s strategy consulting business.

Digitisation is a largely untapped area that offers extraordinary opportunities for private equity firms but most investors aren’t fully aware of the potential and therefore aren’t yet asking the right questions, PwC said.

Sanjeev Krishan, leader, private equity, PwC India said, “Private equity investors in general, including those in India, have been slow in acknowledging the impact digitisation is creating on businesses. There is a significant opportunity for private equity investors to create value in their existing investees by getting their digital strategy right; likewise they can distinguish potential targets when evaluating transactions by proper assessment of their digital focus and what performance enhancement may be possible by giving it a proper focus.”

Industry experts say that going ahead digital would play an integral role in the way economy functions. Many global companies have already started taking their operations digital. While there is a concern that this could also mean some job cuts may be on their way, this would mean lowering of costs and higher profitability for companies. Many companies, including Indian Information Technology ones, area already trying to replace repetitive or templateised jobs with algorithms or artificial intelligence.

“With the right capabilities, a firm can use the lens of digitisation to pick the right targets, avoid potential losses, maximize portfolio value and build a reputation in the markets for preparing companies for future success,” said Steve Roberts, partner PwC global, private equity business practice.