EQT keen to tap Indian wealthy: Jean Eric Salata

The Swedish private equity (PE) firm has invested $6 billion over the last 18 months in India having adopted a buyout strategy through which the investor has picked controlling stakes in businesses such as Indira IVF and HDFC Credila, Indostar, and Gebbs, among others.

Traditionally, EQT like its peers has raised capital largely from sovereign wealth funds, institutional investors and large family offices—looking to expand their exposure to Asian markets. It closed its $14.5 billion EQT Private Capital Asia's BPEA Private Equity Fund IX last month to invest across Asia in markets such as Japan, India, Australia and Southeast Asia. A third of its current fund and the previous one has been invested in India.

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While speaking to the media in Mumbai on Thursday, Jean Eric Salata, chairman EQT Asia and head of private capital Asia, said that such products are becoming very popular and gaining traction amongst the wealthy in Asia, as well. “In India, I think it's still early from a regulatory standpoint. I don't know exactly where we are yet in India on this product, but I think also what we're seeing is that there are a lot more family offices here, domestic capital that's looking to invest. Some of it can invest offshore. Some of it also needs to be in the rupee set up, set up as a rupee fund with the local fund structure. And that's also something we've been looking at as well," he said.

Democratisation of private equity

Salata called it the democratisation of private equity and a new area of growth for the firm and the industry.

“You don’t need to have $1 million to invest...You can invest with as little as maybe $20,000 or $25,000. We call them semi-liquid products that essentially enable the investor to subscribe to the fund on a monthly basis... you can put some money in, a little bit every month, like you would in a stock market fund. It is an evergreen fund and if you want to get your money back, you can redeem your shares every quarter."

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To be clear, this is a growing strategy for the global PE industry. Blackstone, which has raised $250 billion globally through its private wealth clients, is in the early innings of tapping high net worth investor capital in India and South Korea, according to a 21 November report by Private Equity International.

Its other global peer, KKR, expects between 30% and 50% of new capital raised over the next few years to come from the private wealth channel, and Apollo Global Management seeks to raise $50 billion in retail capital cumulatively from 2022 through 2026, global consulting firm Bain & Co. said in a February 2023 report.

“Bain & Co. projects that institutional capital allocated to alternative investments will grow 8% annually over the next decade. Individual wealth invested in alternatives, meanwhile, is expected to grow 12% annually over that period, albeit from a much smaller base," the report said.

Big new growth area

According to Salata, this is a big new growth area for the firm and the PE industry. “You're seeing it develop across many of our peers in our industry, and we're doing the same thing, or developing specific products that allow individuals to invest in private equity, rather than having only to be an institutional product."

The firm that typically rallied behind sunrise sectors such as enterprise tech, healthcare and financial services will now increasingly look at newer growth areas such as consumer and industrial tech.

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The firm is also 12 months away from striking its first real estate deal in India, an area it feels is likely to grow exponentially over the years. “We are planning to start investing in real estate here. We're going to increase our investments in infrastructure, and we're going to increase our investments in private equity. We're very bullish on India. Probably, if I look at what we're doing regionally, it's in logistics mainly," said Hari Gopalakrishnan, Head of India for Private Capital Asia.

The last 12-24 months saw large PE investors returning capital through exits in India. EQT too returned $2.4 billion through sell downs in companies such as RBL Bank, CMS Info Systems and Coforge, in the last 2 years, Salata said.