What do Indian markets fear?
The fall of two global financial behemoths -- Lehman Brothers and Merrill Lynch -- is expected to dent India Inc's ability to raise resources via the equity route.
Experts feel that such events significantly increase the risk perception, which in turn will put all future investments by institutional investors such as pension or endowment funds, on the back burner.
While the public issue market has already dried up, the private equity funds are also becoming conservative in terms of pricing. This is resulting in either inordinate delays in concluding deals or transactions being called off.
There are many instances of private equity fund managers refusing to go ahead with deals after signing the term sheet. Sources said that a leading fund conducted due diligence on two companies in the last fortnight but did not close either deal primarily because of the developments in the US, their home country.
The crisis faced by Merrill Lynch and Lehman Brothers is expected to have a cascading effect on PE firms too.
Image: A man walks out of Merrill Lynch's headquarters in New York. | Photograph: Nicholas Roberts/AFP/Getty Images
Also read: Investors in IPOs lost over Rs 5,000 cr in 2008
Advertisement
