India\u2019s private equity industry is seeing a rise in buyout opportunities as a growing pool of mature assets looks to professionalize operations and accelerate growth, speakers said at the Mint India Investment Summit held on 26\u201327 March in Mumbai.<\/p>\n
\u201cIf you think about the investments we make on the buyout side, we are typically betting on an attractive macro theme and a good competitive position that we can build off. We feel like there\u2019s a handful of things you need to do in a business to unlock value,\u201d said Ashish Kotecha, partner at Bain Capital.<\/p>\n
\u201cWhile it varies by companies or investments, we do run initiatives on cost, cash and pricing. Part of that is M&A being an important tool as a platform or a bolt on acquisition to get a new customer or a market segment you don\u2019t have exposure to. This accelerates the value creation journey and M&A is a key part of that,\u201d he said, adding that the firm also spends significant time considering the right home for the business.<\/p>\n
Also Read | India’s our largest PE investment destination outside US: Warburg Pincus’ Kaye<\/a><\/p>\n Bolt-ons typically allow larger firms, usually backed by private equity firms, to buy smaller businesses to expand operations, diversify offerings, or reach new markets.<\/p>\n Capital as commodity<\/p>\n For good companies with strong fundamentals, capital has increasingly become a commodity amid expanding global pools of money.<\/p>\n \u201cThey’re asking a lot more from the capital partners regarding how they can help add value during the investment journey,\u201d said Mayank Bajpai, partner, TPG Growth and Rise.<\/p>\n EQT, which began buyouts in India in 2013, said more founders are open to handing over control to institutional investors.<\/p>\n \u201cWe still think we are scratching the surface. I still think that buyouts are going to grow much more than in the past. Even talent-wise, we get a lot more managerial talent who say they want to work with private equity. Talent is shifting towards private equity, and it will continue to grow as a source of talent for buyouts,\u201d said Hari Gopalakrishnan, partner and deputy co-head of Private Capital Asia and head of India and global co-head of Services at EQT.<\/p>\n However, buyouts may remain limited in the new-age segment, where first-generation entrepreneurs may resist ceding control.<\/p>\n \u201cIn such cases, private equity<\/a> can still be minority investors. But as these founders decide to move onto other things, buyouts may open here as well,\u201d Gopalakrishnan added.<\/p>\n Sectoral bets<\/p>\n \u201cI think while (buyouts in the) financial services, healthcare, will continue, we will see a lot of investments in the entire AI space going forward,\u201d noted Vikram Raghani, partner, JSA Advocates & Solicitors.<\/p>\n Also Read | At 19x PE, India equities priced lower than Taiwan, Japan, Korea<\/a><\/p>\n For private equity firms, returning capital has become as critical as deploying it.<\/p>\n \u201cPension funds<\/a> and insurance companies were very risk averse, so capital protection is very important for them. As a result, the bulk of the buyout capital goes into businesses that seemed to be downside protected, giving regular returns over time and so established businesses naturally gravitate to that at some level,\u201d Gopalakrishnan explained.<\/p>\n A vibrant capital market is equally vital for sustained exits.<\/p>\n \u201cBut I’m also conscious that for buyouts, if you buy 100% of a company, it’s also not easy to sell down completely. But as the market matures, that will happen over time, and we’ll see more private equity firms take a company from 100 to zero,\u201d he said.<\/p>\n Liquidity tools<\/p>\n New fund structures are emerging to ease liquidity pressures. In 2024, ChrysCapital closed its largest-ever continuation fund at $700 million, anchored by HarbourVest Partners, LGT Capital Partners, and Pantheon Ventures, to remain invested in National Stock Exchange of India.<\/p>\n Continuation funds allow limited partners to exit while enabling firms to stay invested in high-performing assets beyond the typical fund cycle.<\/p>\n