Lead Story

Buyer’s market

A number of private equity investors are stuck in the middle, struggling to find profitable exits

Illustration by Sahil Bhatia

Too much of a good thing can be bad. Take the case of Indian private equity. The initial boom between 2000 and 2005, which saw stellar fund performance, meant India was no longer the land of snake charmers, but the place to be. Be it Warburg Pincus’ 2005 exit from Bharti Airtel, where the firm made its money six times over, ChrysCapital’s exit from Suzlon, where the firm multiplied its investment 10 times over, or Baring’s exit from Mphasis, where the firm invested ₹48 crore but took home a whopping ₹1,150 crore, making money never looked so easy. Investors and bankers, some of them first-time visitors with little clue about India, came in from as far as Iceland to invest in India. Too much money in the hands of inexperienced managers ensured that the euphoria in the public markets spilled over to the unlisted space, pushing valuations to dizzy levels. “It seemed like this gravy train that you hopped on to, put $1 in and got $3 back. Investors assumed the growth story was linear,” says Nainesh Jaisingh, managing director, Standard Chartered Private Equity.