While intrinsic value of business are strong, valuations are expected to lower. In times like these, be it a strategic M&A opportunity requiring private capital or a creative debt / mezzanine solution or distressed opportunities, private equity will be the preferred source of capital.
MUMBAI: Sitting on unprecedented levels of dry powder, private equity as an asset class has had relentless growth. But an economic downturn coupled with covid-19 uncertainty can test its resilience. In an interview with Mint, Siddhartha Shah and Aakash Choubey, partners with law firm Khaitan & Co. open up on the future of private equity – an asset class sitting at the heart of dealmaking. Edited Excerpts:
Siddharth- In 2019, even amidst all the talk of slowdown in the economy, the Private Equity space still hit a high of around $ 45 billion in deal-making. This is the highest level we have seen in India. Against the same backdrop, other emerging markets are also struggling for growth. When an LP sitting 10,000 miles away is looking to allocate capital across markets, they would compare the situation with other emerging markets as well. And here, based on our experience and what we have seen when it comes to fundraising in India, we have got a fairly good share of the global LP allocation.