A Study on Returns Of Private Equity Funds In India

Abstract

Materials and Methods: We used the data of private equity exits from the year 2007 to 2012. We calculated Cash multiple, IRR and Public market equivalent and compared private equity returns with CNX Nifty returns. We compared the difference in returns on different categories classified based on the basis of experience, the size of investments, Type of fund, Stage of investments, Type of Industry, Type of fund, type of exit route, Investment year, Holding period. We regressed deals 94 deals with excess returns and found factors driving abnormal return. newlineRaviraj Karamvir Gohil i ABSTRACT newlineResults and Discussion: We found that 78.60% of private equity deals generated positive returns. We found that private equity has outperformed public markets by on 12% average and 2% median basis. We found that experience of the fund, the size of investments, Type of fund, Stage of investments, Type of Industry, Type of fund, type of exit route, Investment year, and holding period explained the difference in returns. We found that Type of Industry, Type of exit route, Stage of investment, holding period, Type of fund, Type of Sponsor and Nifty value drives Excess returns . newlineConclusion: Private equity in India has generated attractive returns. The returns mainly dedicated to certain factors noted by thesis. The abnormal returns are also driven by certain factors as noted by the thesis. The thesis provides insight of attractiveness of PE as Investment Avenue, devising future investment strategy, regulation and reporting of private equity in India and a better understanding of the model of risk and return in private equity.