Higher PE/VC funding boosts governance excellence

Higher private equity (PE) and venture capital (VC) investment has driven governance excellence and accountability among Indian companies, leading to better valuations, heads of top PE firms said on Friday.

- JADEN MATHEW PAUL & ROSHNI SHEKHAR

"After we make an investment, there is an element of higher governance standards, an element of strategy in terms of picking the right lanes and taking a longer view because we have a longer horizon within which companies want to build these businesses," said Ashish Kotecha, Partner, PE, Bain Capital, at the Business Standard BFSI Insight Summit.

Kotecha highlighted that the strongest indicator of PE's value is its long-term track record and measurable impact on portfolio firms. He said well-managed PE-backed firms consistently outperform their public counterparts, with Bain Capital's portfolio firms achieving 50-100 per cent greater growth in revenue, Ebitda, and stock price appreciation than their peers.

Ankur Bansal, co-founder & managing director (MD) of Blacksoil Capital, said the increasing attention on public markets has helped many businesses focus on fundamentals. "There's a move towards fixing the business from the basic nuts and bolts, because the public market has now become the latest avenue for exit. From a business perspective, the demand for debt has only increased manifold as the equity supply has reduced, with more people looking for alternative avenues of capital, which has become a significant route for accessing funds quickly," said Bansal.