PE activity for eCom companies muted in future – Feedback

PE activity for e-commerce companies is expected to remain muted in the foreseeable future as fragile global recovery and recent amendment to the India-Mauritius tax treaty may keep global investors away from India, India Ratings and Research (Ind-Ra) said today.

E-tailers, which were flushed with private equity funds till 2015 have had lesser fortune this year, with muted deals during January-April 2016. “The funding concerns have arisen at a time when e-tailers are undergoing a structural transition in their business model, involving considerable capital expenditure,” it added. Ind-Ra further said funding through conventional bank lending route is highly unlikely and consequently e-commerce firms will need to look for specialised institutional investors that have a high risk appetite to avail bridge finance.

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