Over the past decade, India emerged as a credible and high potential investment destination. Private equity peaked in 2007 with 405 announced deals at a total announced value of $19 bn. The factors behind the growth in the number of PE deals include attractive valuations for investment, favorable exit options, and willingness of the promoters to dilute their stake. Besides, family-based companies were looking at consolidating their operations and opportunities for being better managed, along with raising funds.

However, PE players are now concerned with the firms that have significant promoter control and are choosing selective investments, as exit opportunities shrink and company and project valuations fall. Analysts view that it is a great opportunity for PE players, as quality company stakes are available at reasonable valuations. But still promoters are not showing any intention of reducing their valuation expectations and it is getting difficult for PE investors. As such, they are expected to generate lower returns in the coming years against huge gains in the past. The total number of PE deals announced in 2008 stood at 312, with total value of $10.59 bn. As estimated by TPG Inc., a leading global private investment firm, PE investments may fall to as low as $5 bn in 2009. The global financial crisis has affected the PE industry not only in India but across the globe.

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