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Investments by private equity and venture capital funds in the country are likely to be subdued this year due to growth concerns coupled with regulatory/tax uncertainties, an official of the Indian Private Equity & Venture Capital Association said.
"Growth in the PE and VC spaces is likely to be subdued in 2013 due to slowing of the domestic economy. Also, policy uncertainty on the tax front such as the GAAR ( General Anti- Avoidance Rule) is another drag on the sentiment," Association President Mahendra Swarup told PTI.
He also said that despite the deferment of GAAR to April 2016, there is lack of clarity regarding the retrospective nature of its implementation.
On the amount of PE funds likely to flow in, Swarup said, "It will be same as 2012...We expect USD 8-10 billion."
The money-raising by fund houses too will remain subdued, he added.
Swarup also said if the stock market does well this year as predicted, there would be exits by PE funds. "There are many funds which have invested during 2005-06 and are looking for exiting their present portfolios. If there is good run in the stock market, then these funds will exit."
Many destinations in the world are competing with India for PE money and we will lose out if the real economy doesn't recover in the near future, he warned. "The real economy should witness growth to attract PE funds. Unless it does good funds will be reluctant to commit money as they have to show return to their investors."
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