Even though global fundraising figures were the highest in 2013 since 2009, the emerging markets’ share of the pie has declined steadily. Brazil has overtaken India in fundraising since 2011 and Limited Partners (LPs) prefer the better growth in developed countries like the US.
LPs are asking tough questions to General Partners (GPs) and are looking specifically at the team, strategy and track record. Fund managers have changed their focus to being financial solutions providers offering sector expertise than being pure equity partners. LPs are giving more leeway on the time horizon to make exits. A number of GPs opt for collaborative deals with other funds. They are re-evaluating their investment strategy and focusing on due-diligence. Fund managers are thinking of liquidity options right at the beginning of an investment.
These were among the observations made by panellists at the recent VCCircle India Limited Partners Summit 2014. The debate was attended by Manish Kejriwal, Managing Partner at Kedaara Capital Advisors LLP; Vishal Nevatia, Managing Partner at India Value Fund; Amit Bhatiani, Partner at CX Partners; Nupur Garg, Senior Investment Officer - Private Equity & Investment Funds at World Bank’s investment arm IFC and Pavan A Gupte, an Independent Advisor, Former Head of Asia, Hermes GPE and Chief Strategy Officer, CVCI Private Equity who moderated the panel.
Panellists discussed the lack of enthusiasm of LPs towards India, how fund managers reduced the size of funds and how a few fund managers with strong background successfully raised funds. The panel also pointed out the fact that LPs are more direct and intrusive in their approach towards GPs.