Indian private equity is going through a trying time, but deals and exit opportunities are viable, with the infrastructure sector in particular showing promise, says an industry pioneer.

“The last couple of years have been very difficult, there’s no doubt about it,” says Archana Hingorani, chief executive of IL&FS Investment Managers Limited (IIML), one of India’s largest private equity firms, running more than $3.2 billion in assets.

PE fund managers have to work harder on their portfolio firms and also cope with the fact that “exits are not that simple”, she notes. “Most importantly, fundraising is very difficult.”

However, India’s private equity landscape is not in dire straits and is showing signs of recovery, although exit opportunities are mainly through sales to strategic buyers.

Government statistics show there were only 20 IPOs on domestic exchanges from April to December last year.

Yet Hingorani notes that IPOs are not the typical exit route for PE-invested companies, and discounts to strategic buyers are not commonplace.

“I’m not seeing too much of a discount on fair value,” she tells AsianInvestor during a recent visit to Hong Kong. “In fact, in many instances it may even be fair value as far as [strategic sales] are concerned.”

Fundraising is another task that has proven challenging, albeit not impossible. Statistics released last month from the Emerging Markets Private Equity Association indicate that India-specific funds raised $2 billion last year, down from $2.7 billion in 2011.

At the moment IIML is focusing on the infrastructure space – one of the firm’s three specialist sectors, along with growth private equity and real estate – as “there is still demand for infrastructure projects and infrastructure funds”, says Hingorani.

“This is one space where capital is available,” she notes.

Mumbai-based IL&FS Investment Managers, set up in 1989, has been through many economic cycles in India private equity. Hingorani has been with the firm since 1993, at a time when private equity was at an early stage of development in the country.

She foresees greater investment opportunities in Indian infrastructure in the near term, with funds focusing on specific sub-sectors such as greenfield and renewables-related projects.

“We are at a stage where, since capital is required in such great abundance across infrastructure sub-sectors, the trend in the next couple of years will be [launches of] more focused strategies that will create different types of funds.”