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PEs' fund raising plan takes a knock
By siliconindia
Mumbai: The diminishing appetite of investors is hurting the fund raising plans of the PE players. Corporates are also in a tight spot as the markets have turned unfavorable in terms of raising money, reported Business Standard.
"We are hoping to close the fund by June-end and there is a possibility of falling short by 15 per cent," said a source at a financial institution.
Owing to the turbulence in the global markets, some of the PE players are postponing their fund raising plans, while others are revising their original targets and extending closing dates for their funds.
According to banking sources, ICICI group, which is planning to raise over $7 billion for its PE activities, said the entire process is being prolonged because of the market conditions.
"The fund raising plans of PE firms will be dampened considering the current market conditions. There will be a temporary flip," said P Harshavardhan, partner & Director, Boston Consulting Group(India).
According to industry estimates, the amount being raised by PE players is more than $12 billion this year. Factors that have led to the meltdown include signs of a slowdown in growth in the U.S., a liquidity crunch and the spreading of the impact of the U.S. subprime crisis to other markets across the globe.
"Given the state of the capital markets, fund raising plans of PE funds will get impacted as investment banks and family offices who invests into these funds will reduce their exposure," said Ranu Vohra, managing director, Avendus Advisors.