PE Funds become extra cautious on pre- investment assessment

Various developments over the last two years led to an increased emphasis on more detailed pre investment due diligence within the PE industry in India.

March 24, 2011 / 19:07 IST

Various developments over the last two years including the global financial crisis, ensuing credit crunch, general tightness in the financial markets, corporate governance related cases in India and globally, greater ticket sizes and consequently the stakes have all led to an increased emphasis on more detailed pre investment due diligence within the PE industry in India.

The LPs and the investment committees have become far more cautious and detailed in their investment approach. The Investment Committees (ICs) is taking a more granular look at the deals and are questioning the assumptions more aggressively.

Moreover, given the high valuations still in India, PE funds are increasingly looking for greater comfort on the long-term value creation potential of potential investees in an effort to support expected exit valuations.

Thus the funds today are looking beyond the conventional financial and tax due diligence and are seeking diligences in the following areas

first published: Mar 24, 2011 06:16 pm

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