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Private equity (PE) investments in India are becoming increasingly attractive to global investors, according to a recent analysis by investment firm Coller Capital. The report found that nearly two-thirds of respondents see an improving risk to reward balance in India, making it the top choice for PE investments in the Asia Pacific region. This is followed by Japan and South Korea.
The survey, which had a sample size of 107 private capital investors overseeing a combined value of $1.9 trillion in assets under management (AUM), also revealed that limited partners in these regions have the strongest appetite for secondaries, with 42% planning to increase their allocations. This is ahead of other developed nations like Europe (38%) and North America (13%).
According to William Yea, investment principal at Coller Capital, India is a very interesting market for private investments. He believes that the country has been receiving a lot of attention from both global and domestic investors, who have expressed their intent to increase their presence in the market. Yea also noted that India’s public markets offer great exit opportunities for private equity firms, which is not the case in other Asian markets.
This year, several global firms have outlined plans to increase their investments in India. London-based Pantheon Ventures and US-based HarbourVest Partners have both expressed their intentions to scale up their funds and direct investments in the country. They have also backed prominent Indian PE firms like ChrysCapital and Kedaara Capital.
The Indian ecosystem has also seen a growing trend of fund managers branching out of reputed VC and PE firms to start their own funds. This has created new pools of capital for companies to tap into. Some examples include former Orios Ventures’ partners Rajeev Suri and Anup Jain’s BlueGreen Ventures and former Peak XV’s managing director Piyush Gupta’s Kenro Capital, which will target secondaries in the country.
While pan-Asian funds have emerged as one of the most important avenues for global investors in Asia, LPs are also wary of the scarcity of private equity talent, competition for deals, and a challenging exit environment. However, with India’s strong rebound and ability to offer liquidity to companies at an earlier stage, it remains a top choice for PE investments in the region.
In conclusion, India’s private equity market is gaining traction among global investors, with the country’s improving risk to reward balance and strong exit opportunities making it an attractive destination for investments. This trend is expected to continue, with more firms looking to increase their presence in the Indian market.