Extracts from the Grant Thornton press release on the report:
The most dramatic decline in
optimism from 2011 is evident in the BRICS: Brazil, Russia, India, China and
South Africa. This year, 78 percent of respondents in these markets described
the fundraising outlook as “negative” or “very negative”. In 2011, the figure
was 39 percent.
On Cross-Border Buyers
…Globally, China and Japan, Europe
and North America are the regions from which most GPs expect non-domestic
strategic buyers to originate.Regions
as expected sources of non-domestic acquirers
Less than 1% Source: Global Private Equity Report 2012,
Grant Thornton“Of particular interest is the
expected significance of Japan, reflecting the fact that the strong Yen coupled
with sluggish domestic demand is encouraging international expansion. PEs
globally expect to see Japanese buyers, and this is particularly the case in
Europe, India and Asia Pacific.”
On Deal Activity
…Many private equity executives
expect both China and India to suffer a decline in deal activity in the next 12
months. This represents a dramatic turnaround in sentiment for both countries.
In 2011, 78 percent of respondents expected investment activity in India to
increase, with the remaining 22 percent expecting it to remain steady. This
year, 45 percent expect it to decline.
Knowledge@Wharton has an article exploring why India ranks poorly for which it had sought views from Venture Intelligence. Extracts:
Arun Natarajan, founder and CEO of Venture
Intelligence, a Chennai–based research services firm focused on PE and
M&A deals, adds that slow to non-existent reforms and lack of
profitable exits continue to be the main dampeners. Says Natarajan:
“Indian PE has been facing challenges which are a mix of both
country-level issues and industry-level issues. The lack of economic
reforms over the past several years and retrograde steps like the
attempt to tax transactions retrospectively [like in the Vodafone-Hutch
deal] have shaken global investor confidence. On top of that, the lack
of good returns — especially the huge overhang of un-exited investments
from the 2006-2007 period — is something that LPs [limited partners]
have been quite critical of.”
…Natarajan
of Venture Intelligence notes: “The fundamentals of the economy —
whether it’s the relatively strong economic growth, especially when
compared to the developed world, strong domestic consumer spending, etc.
— continue to keep India attractive for multinationals and also
long-term financial investors who are the most significant source of
capital for Indian PE funds. Consistent government action on the reforms
front, especially with a focus on implementation rather than mere
pronouncements of intent, is likely to be the main positive catalyst.”
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