India's Booming Private Equity Market Attracts Global Investors, Reports Jefferies

Jefferies latest report identifies India as a prime market for private equity investments, despite global challenges. The country's stock market is resilient, with significant growth observed since 2020. The report highlights India's favorable environment for capital raising and investment opportunities, driven by retail investor participation and strong domestic demand.

Global brokerage firm Jefferies has spotlighted India as a top market for listing private equity (PE) investments, forecasting a substantial pipeline for global investment bankers. Despite existing hurdles like liquidity constraints and reduced distributions from major firms, India is deemed a favorable locale for capital raising and investment.

'This year, the report suggests a massive pipeline for global investment bankers. However, questions remain about stock demand and valuations. Currently, India stands as the premier market for PE investments,' notes the report. It also mentions that the Federal Reserve's potential easing cycle could ease pressures on the leveraged private equity sector but warns of possible global economic slowdowns.

Jefferies' previous findings echoed similar sentiments, highlighting India's stock market resilience post-general elections. As of July 2024, India's market capitalization soared to 145% of GDP, up from 52% in March 2020. While not cheap, this valuation does not justify a sell-off from a long-term view.

The report underscores India's market capitalization, now approximately USD 5.2 trillion, a 296% jump from its March 2020 low. This surge indicates strong domestic demand. 'While stock market capitalization is now 145% of GDP, up from 52% in March 2020, it's not a reason to sell unless for short-term or tactical reasons,' it adds.

Jefferies also highlights the growing role of retail investors via Systematic Investment Plans (SIPs) and the National Pension System (NPS) in transforming the Indian market. This shift is likened to the 'cult of the equity' phenomenon seen in the US since the 1980s, presenting a promising future for equity investments in India. (ANI)

(With inputs from agencies.)