Private equity firms eye investment exits, low valuations in 2013

Some of the problems that haunted PE investments in the country will continue well into 2013 as well.

"In 2012, sellers often stuck to their high valuation benchmarking the previous year and buyers wanted to pay the value based on the increased risk in the company. 2013, though positive, will see similar situation arising," Singh said. There would be action in strategic buyouts too, with many inbound deals expected.

"Many Japanese corporate firms are strong contenders to participate in manufacturing, IT and are interested in these sectors in India along with the local players," said Archana Hingorani, chief executive officer and executive director, IL&FS Investment Managers. Japanese firm Nippon Life Insurance picked up substantial stake in Reliance Capital Asset Management in June this year. In September, US-based Invesco bought 49% stake in Religare Asset Management. "2013 will see more controlled transactions or buyouts as compared to earlier," said Singh.

Financial services, healthcare and consumer related services remain the top pick for investments in 2013, whereas infrastructure still seems to look like a far-off investment haven.

"The sectors ripe for exits are industrials, consumer and infrastructure related services. The core infrastructure sector especially ports is however, still challenged for the first six weeks because of government inaction, high debt levels and unclear policy," said Sanjeev Krishnan, leader for PE practice at PwC.

"The earlier sunrise sectors like clean technology have lost their charm this time," said Mahendra Swarup, president at PE/VC trade body Indian Venture Capital and Private Equity Association.

"Digital-oriented and consumer-related space apart from healthcare and food and agriculture looks positive," he added. "Sectors like financial services, technology, retail and consumer goods will attract more investments," Singh said.

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