Fund Raising by PE and VCs to Increase by 30-40 percent in 2010

Fund Raising by PE and VCs to Increase by 30-40 percent in 2010


Private equity (PE) players and venture capitalists (VCs) are back in the market to raise funds.


Market experts believe that 2010 will see these players raising $13-15 billion, almost as equal to what PE players and VCs raised in 2008.


PE players and VCs had raised $10-11 billion in 2009, though most of this was in the second half of 2009.


Experts expect to see a 30-40 per cent rise in fund-raising this calendar year courtesy PE players and VCs.


“Close to 45 funds are either preparing to enter the market or have already hit the road to raise funds.

While I feel that matching the level of 2007 is difficult, the year will be better than 2009,”

said Jagannadham Thunuguntla, equity head, SMC Capitals.


Industry experts expect that this year will be governed by returns.

Many Industry experts are of view that LPs are going to focus on returns and returns will be more than 20 per cent, better than in 2009.


“I think LPs are still trying to rework their portfolios.

It will be difficult for general partners to convince LPs to invest,” said Thunuguntla.


Infrastructure, consumer services, education, healthcare, financial and clean technology will be the favoured sectors, say experts.


One sector that is already in focus is infrastructure.

The players are in the process of raising close to Rs 8,541 crore ($1.78billion) worth of infrastructure funds.


Investors will become company-specific rather than sector-specific.

Good sectors can have bad companies and so it makes sense to focus on companies,” said Thunuguntla.


Fund-raising by VCs already seems to be gaining momentum.

Moreover Industry experts are of view that fund-raising will be more selective this year.

It will be better in 2010 than what was seen in 2008-09.


However experts say that the number of funds that get allocation from LPs will come down significantly this year.


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