The pharmaceutical sector is expected to attract more private equity in 2012 compared to 2011 as the initial public offer (IPO) market is expected to remain dry.
“The options (to raise funds) are limited as the IPO window is closed,” said Utkarsh Palnitkar, executive director, Centrum Capital. “Domestic consumption is going to be a main theme. In next 4-5 years we will see lot more deals in domestic consumption.”
Going forward companies having strong presence in the domestic market will attract private equity funds unlike in the past years where most of the money went in the companies having export oriented business.
“It’s going to be good time for private equity because there are no IPOs happening. People with good plans can not wait for one year, they will raise money,” said Aluri Srinivas Rao, managing director, Morgan Stanley Private Equity, India. “The number of deals going to be higher than what it was last year.”
“Consumption driven firms will generate interest of private equity. When the market is growing at 15-16%, companies which are able to carve out realistic market share in that will attract money,” said Palnitkar.
Companies in over-the-counter (OTC) segment, self help medicines and alternative medicines will also be in the priority list of equity players.
“Marketing innovation and product innovation are the other two areas where the money will go,” added Rao.