In the last few years, private equity investment in non-banking financial companies has increased considerably. Analysing the investment and deal patterns for the investments made between 1999 and 2020, it is evident that most of the target companies are unlisted and most of the investments are un-exited. Foreign private equity investors largely dominate in the Indian NBFC space. The typical private equity behaviour to buy assets at distress prices, working to drive their value up before exiting, is a serious risk, and the large private equity money flowing into the NBFC sector has the potential to cause damage to the financial system, and therefore requires strict regulation.
