Impact of rupee fall on PE investments:
While the rupee has depreciated at a CAGR of four to five per cent over the last two decades, movements have usually been in step functions with sharp movements followed by periods of stability. Therefore, we feel this may be a good time to invest from a currency perspective.
Handling exits in the current environment:
We think that sales to strategies or other PEs might help investors realize value for sound businesses; accessing capital markets in the current environment is unadvisable. Handling the exchange rate issues will however be very challenging.
Best things PEs can do now
We continue to believe in the long term India growth story; this might also be a good time to invest in export oriented businesses given the green shoots in the developed world and the benefit to Indian exporters from the currency drop. While businesses with a significant import component will face margin pressures and demand compression, we think that current valuations provide attractive vintages for PE investing.