The good, the bad and the ugly in 2009:
The good part is that the mood is better today than a year back. I have learnt a new phrase – “cautiously non-pessimistic”! That describes the mood today. I recall reading a research paper around a year back that argues that down cycles have become shorter over the past 500 years because of global cooperation. This seems to be the case. The bad part is that valuations have gone through the roof – in India it's as if the crisis never happened and it was just a bad dream that we all had. The excesses of the past seem to be back with listed investors willing to pay ridiculous valuations ignoring execution and market risks.
Changes for 2010:
GPs will continue to be cautious. I see LPs coming back into emerging markets, mainly because this is where the growth is. China and India will lead the way together with Brazil. But LPs will be more discerning – looking at team stability and track record (and, more importantly, the quality of track record).
This comment first appeared as part of a larger article in the PEI Asia Annual Review 2009, which was published with the December/January issue.