Foreign PE funds make a beeline for India as global growth falters

Firms that are setting up shop in India include Singapore-based Mars Growth Capital Partners (AUM $1.5 billion), according to two people familiar with the plans.

Others that have set up local operations since this January include South Korea’s sovereign fund KIC, Japan’s Advantage Partners, and Singapore-based Growtheum Capital Partners. German special situations fund Mutares is also opening an office in India, the firm’s executives told Moneycontrol in February.

There are also firms such as EQT that are already in India, and planning to ramp up.

Last week, Gita Gopinath, deputy managing director of the International Monetary Fund (IMF), expressed optimism about India becoming the world’s third-largest economy by 2027. She noted that India’s growth exceeded expectations last fiscal year, positively impacting current forecasts. The Indian economy grew 8.2% in FY24, beating all estimates and expectations.

Pointing out that buoyancy in the capital markets has given global funds conviction around exits, Anshul Lodha, managing director for India at international recruitment firm Michael Page, said, “India is one of the most prominent and growing markets globally, so all regional and global funds are looking at setting up local offices.”

Lodha added that it is also important for global funds to have an India presence “as LPs (limited partners) are looking at India exposure through their global or regional funds”.

Why India?

The first phase of private equity growth in India, for more than two decades, mostly saw US-based firms such as Blackstone, Carlyle, KKR, Apax Partners, Advent International and Bain Capital, among others, establishing presence and winning big.

Their success is now attracting investors from the Asian and European regions to increasingly look at the Indian market.

From January 2023, more than 800 active PE/VC funds have invested in one or more Indian companies, with a cumulative investment of more than $50 billion, according to audit & consulting firm PwC India.

“Enthused with blockbuster exits, all large global PE funds have been speaking of deploying substantial capital over the next three to five years,” said Bhavin Shah, partner and leader – private equity and deals at PwC India. “Many new regional and global funds , who have been investing from Singapore and the US, are now planning to open India offices.”

The influx of funds is likely to increase competition in the market, which is good for Indian entrepreneurs and enterprises, say industry veterans.

“⁠Private equity as an asset class and India as an investment destination has evolved tremendously over the last decade,” says Sanjiv Kaul, partner at Indian bulge bracket PE firm ChrysCapital. “⁠There is bound to be increased competition, but it will only improve the quality and emphasis of value-add creation on the part of PE players in India.”

According to Kaul, corporates in India with private equity infusion will conform increasingly to best-in-class global practices of governance and quality standards.

Who are setting up shop

KIC (Korea Investment Corp) opened an office in Mumbai this April, appointing Kwon Kiho as its India head. KIC has so far invested in India by picking up limited partner interests in other Indian-run funds, and said in January that it will hire two other professionals.

“As India’s economy grows, it is expected to provide new business opportunities in various areas, so Korea will join this trend,” South Korea’s Mumbai consul general Kim Young-ok was quoted as saying in Korean business paper. Maeil on the inauguration of its office in Mumbai’s BKC district.

In March, Japanese buyout firm Advantage Partners hired Kaushik Subramaniam to build out its India presence. Subramaniam is a former Apollo Global executive, who now has the mandate to build the Japanese firm’s presence in India.

In June, Mars Growth Capital, which has invested in startups such as Infra.market, said that it had appointed Sonam Gupta, a former director at Drip Capital, to lead its presence in India.

The influx of funds is likely to increase competition in the market, which is good for Indian entrepreneurs and enterprises —Industry veterans

“The decision to have representation in Mumbai stems from the firm’s dedication to fostering long-term relationships with Indian businesses,” the firm said in a statement in June.

Presence in India will allow Mars to “provide enhanced support, tailored financial solutions, and direct access to its global network of resources”, the firm said in the statement. Mars has invested $300 million in India and plans to further scale its presence, it said.

Growtheum Partners appointed L Catterton’s Saurabh Mehta as managing director and India head in July.

Last September, Platinum Equity appointed Amit Sobti to lead its Asia business. Sobti has been scaling the firm’s presence in India this year.

Meanwhile, London-based Vitruvian Partners hired Kartikeya Kaji from Kedaara Capital in June to head its local operations.

Building presence

Even as new funds are coming to India, those who have already established their presence here want to expand horizontally and enter newer asset classes.

Swedish buyout fund EQT, which has made large buyout and growth investments in India, will soon expand its infrastructure team in India, two people with knowledge of the company’s plans said.

“The firm (EQT) currently covers the region’s infrastructure deals from its Singapore office. It will look to expand its on-ground presence with a few hires, directly sourcing deals from here,” one of the persons cited above said on condition of anonymity.

(An earlier version of this story had said that Abu Dhabi-based Lunate is planning to set up shop in India. The company has clarified that it will not have an on-ground presence in India.)