mumbai we stay away from places that have impossible governments and impossible tax regimes which means sayonara to india tpg capital founderpartner david bonderman said recently tearing into the countrys investment attractiveness bonderman among the most influential private equity pe investors said publicly what his peers quipped behind the scenes india is possibly the least attractive of the emerging markets for pe right now indias recent regulatory moves on retrospective taxes spooked pe funds which are longterm risk investors but its only a part of the story going awry big investors into pe firms like global pension funds university endowments and family offices piqued with lower growth poor corporate governance and bad returns are cutting back capital allocations for investments in india this leaves more than 500 pe firms in the country struggling for survival with the sector bracing for a sudden contraction in the number of funds within 12 to 18 months the present count of pe firms is a staggering jump considering india had less than 20 just over a decade ago pe firms invested 398 billion in the first six months of 2012 compared to 52 billion in the yearago period said a jm financial note on the industry the 23 decline by value probably tracked the rupees drop against the us dollar but the number of deals remained flat at 185 suggesting the shrinking size of investments global investor confidence has been shaken badly even as india vies with not china but indonesia vietnam and south africa for capital indias operating business climate always has had challenges but there was growth economic slowdown which may be lingering for a while can be unsettling said wilfried aulbur managing partner roland berger a global management consulting firm private equity mostly made growth capital investments for minority stakes in indian companies they have had little influence on the strong promoterdriven businesses and hardly managed what they usually do in western markets to improve return on investments he added few pe firms have made decent profits even though bulgebracket players like blackstone group have a reasonably big portfolio in india a fund manager who started investing well over a decade ago said most of his investments since 2006 made no profits till date while a few earlier deals showed returns in high teens or below 20 firms like kohlberg kravis roberts co kkr started nbfcs to extend financing for fixed returns since profits on classic private equity deals are becoming tedious incidentally industry insiders reckon that not more than 200 pe funds are active currently the number of pe firms operating in india shall decline as many would find it tougher to raise a new fund for investments this would be more in the case of indiafocused pes than global firms said bhavesh shah managing director jm financial shah said some global firms could realign their emerging markets exposure based on investment attractiveness and portfolio performance the pe industry is unlikely to see a spate of consolidation