Keeping a tight grip

Private equity and venture capital investors have returned to India in cautious mood

Alfred Romann reports

After more than a year on the sidelines, venture capital and private equity investors are getting back to business. Funds are increasingly active and managers are searching for opportunities in India. Observers report an increase in both activity and optimism, and a general belief that the worst of the economic downturn is over.

However, much of the activity now evident among venture capital and private equity funds is “busy work” – due diligence, meetings and searches for opportunities. Few cheques are actually being signed. Concerns about the substance of the recovery mean many investors with a toe in the water are still hesitating to jump in.

“The level of activity has picked up. There are signs of life that were missing four or five months ago,” says Sridhar Gorthi, a partner at Trilegal. Yet Gorthi notes that most of the work underway is linked to pre or post-deal activities. “There are not that many new-money deals on the ground,” he admits.