Private Equity Investment Strategy in India's Port Sector

Abstract

This article focuses on the investment strategy for the Private Equity (PE) investors in Indian port sector. The emerging port sector in developing countries like India is attracting several PE players because of the nature of the asset which can provide them a stable return over the long run. Due to the viability funding gap in this sector, extensive PE funding is expected in the near future. The PE players will fulfill the funding gap and bring transparency, strong business network and corporate governance making port companies globally competitive. The article explains the steps to be followed by the PE investor before investing in a port company/project in the Indian context. Subsequently, the authors propose a new model for calculating the premium generally paid to the port developer/promoter for dilution of the equity. The model can be customized and applied in other sectors to determine and justify the premium to be paid by the PE investor.

TOPICS: Private equity, emerging, other real assets, quantitative methods