PE funds set to play bigger role in '08

Private equity funds are set to gain prominence in the board rooms of India Inc. in 2008. They would play an active role in ensuring corporate governance and undertaking management buyouts.

"We expect to see more changes, increased transparency, corporate governance and shareholder wealth generation as private equity influences corporate behaviour within the board rooms," said Harish HV, partner, Corporate Advisory Services, Grant Thornton.

Private equity investments crossed $17 billion in calendar 2007 and are expected to grow by 50 per cent in the year 2008. Data compiled by the international accounting firm Grant Thornton revealed an investment of $17.14 billion in the year 2007. "PE investments will grow to $25 billion in the year 2008," added Harish.

The PE funds are likely to favour infrastructure and allied sectors in 2008, while media and manufacturing could emerge as the dark horses.

PE investments are likely to push up the number of management buy-outs, said a PE advisor connected with such deals. The PE players purchased 26 per cent or more stake in 15-20 companies in 2007. Blackstone acquired a controlling stake in garment exporter Gokaldas.

The country has been receiving private equity investments since years. With the galloping stock prices, it is profit booking time with respect to the older PE deals." The PE players are likely to book profits amounting to $7-8 billion on their maturing investments," Harish noted.

The PE funds may continue to remain unregulated, thanks to their increasing clout. The Sebi and RBI are, however, discussing ways and means of regulating them.

Far from being a sole Indian concern, the regulation issue is also being deliberated by IOSCO, a global body of capital market regulators. Regulations might be a reality in 2008, said one of the PE players.

MONEY-WISE

Private equity investments crossed $17 billion in 2007 and are expected to grow by 50 per cent in 2008

The PE players purchased 26 per cent or more stake in 15-20 companies in 2007

The PE players are likely to book profits amounting to $7-8 bn