The private equity industry is in transition now and sectors related to direct consumption such as consumer products, health care and financial services will continue to be the key focus sectors in 2013, according to the latest Ernst &Young private equity annual report titled ‘Second Innings – An industry in transition.’

“Infrastructure sector can be a major swing factor in the overall activity, especially if the Government takes steps, both policy and administrative, to boost investment activity in the sector,” the report added.

Exits and portfolio management are bound to continue attracting significant focus and bandwidth from funds, while exit activity may be more active, particularly toward the latter part of 2013, when a number of funds will be approaching the end of their terms. “Fund raising is also likely to remain subdued as investors await the exit performance of a number of Indian general partners in the short term and the election of the new Government and the direction of its policies in 2014,” the report added.

“It is still not clear if the equilibrium has been reached, but we do expect the PE market to determine its own balance in the next 12 to 24 months, both in the terms of number of fund managers and the extent of PE money that India can absorb annually. With the end of the first full PE investment cycle in India culminating with the current transitory phase, the industry is starting its second innings and 2013 may well define its future form and shape,” added Myank Rastogi, Partner, Private Equity, Ernst and Young.

manisha.jha@thehindu.co.in

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