The measures taken by the Reserve Bank of India to quell excessive speculative activity in the foreign exchange market and stabilise the rupee are unlikely to have any bearing on private equity (PE) funds and venture capital (VC) players,according to PE investors.
However,terming the RBI measures as short-term,the PEs said structural changes were needed to improve the currency against the greenback. The real issue is structural issue around the rupee and that impacts the PE industry. There is a structural imbalance. Our consumption has been excessive and lot of it has been financed by foreign investors who are looking at returns over a period of time… We need to get our act together on manufacturing…, Rahul Bhasin,managing partner,Baring India Investment,said.
Sanjay Nayar,CEO,KKR India,said that as regard rupee impacting equity market,the main cause of concern is investor confidence and the investment coming from the private sector. I would worry about the private business sector to invest. I think thats paramount, he said. The PE funds and VC players,among others,avoid making investments in weak market conditions as their exits through subsequent initial public offers (IPOs) of the firms become difficult. The IPO market has seen a subdued response for quite some time now.