“The days of playing the Valuation Arbitrage game – of investing in a private company and it taking public at a higher multiple and looking intelligent in the process – are gone. The only scope for such an arbitrage today is to spot a sector early enough,” commented Sunil Kolangara, Director, Ascent Capital. “Passive investments are also a thing of the past – PE investors, including those who hold minority stakes, are much more hands on with their portfolio companies these days,” he added.
With executing exits continuing to be challenging and any slow down in the public markets affecting valuations in the PE market, fund managers are going to be very selective in making investments in the months ahead, Kolangara felt. Echoing the sentiment, Arvind Malhan, Partner, New Silk Route, said that “Selectivity, Specialization and Superior Returns” would be the key areas of focus for PE investors. He highlighted how various funds are choosing to specialize in segments like distressed assets (especially with many banks restructuring their non-performing assets), mezzanine funding, buyouts, etc.
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