VIDEO: Gulpreet Kohli of ChrysCapital Partners

"We have seen valuations become cheaper in the last 6-9 months because the number of funds looking at those deals has come down," Kohli said. "A lot of that will continue over the next 12-24 months."

ChrysCapital targets private and PIPE deals, typically committing $20-60 million per transaction and taking an equity stake of 10-20%. Kohli identifies IT services and pharmaceuticals as the most attractive sectors at present, followed by financial services and consumer. The firm is steering clear of manufacturing and infrastructure due to concerns about government policy and excessive leverage.

ChysCapital focuses on mid-size companies with an established track record. Kohli adds that early-stage opportunities are less attractive because it can be difficult building companies to a size at which they can be exited.

"If you take a $20 million company and make it $40 million it's still a very small company," he explains. "What you have to think about is five years later when you are exiting the company, what is the scale and size? Either the IPO market has to like it because 70% of our exits are through the public markets, or a trade buyer or a fund would like it."

The latter option - private equity to private equity sales - has gained traction in India in recent years, with secondary transactions totaling $963.4 million for the first 11 months of this year, having reached $1.58 billion in 2012, much higher than in previous years. The 2013 figure includes ChrysCapital's exit of its stake in Hexaware Technologies to Baring Private Equity Asia.

Kohli notes that the returns from a trade sale aren't necessarily that different to an IPO, but a trade sale is often easier to transact. "An IPO is a much longer process and it can take up to 18 months," he says. "If you find a good buyer in the PE community you can get through the process a lot quicker."

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• People
• South Asia
• India
• ChrysCapital Management
• Avcjtv