Faced with private market valuations that have failed to mirror the price corrections in public markets, homegrown private equity major Kedaara Capital is adjusting its investment pace and raising underwriting standards for new acquisitions.
"In a higher pricing scenario, we sell more and buy less," Manish Kejriwal, founder and managing partner of Kedaara Capital, told Mint in an interview.
"When you pay more for an asset, you must take less risk and the bar rises. An investment committee that tolerated five risk factors now accepts only one or two. Instead of approving 10 deals, you may only approve three or four," he said.
The firm is therefore intensifying its due diligence processes to separate structural economic shifts from mere valuation volatility across its target pipeline. "When you have extremely high valuations like you had last year, you step on the gas as far as divestments are concerned," Kejriwal explained. “You create more exits, but you slow down your pace of investments.”
Kedaara Capital was founded by Kejriwal, Sunish Sharma and Nishant Sharma about 15 years ago.
Among its notable transactions in 2025, Kedaara cashed out ₹296 crore through Lenskart's offer for sale, representing a five-fold return on its initial investment. Earlier that year, the firm completed the divestment of its residual 26.47% stake in Aavas Financiers, selling it to CVC Capital in a transaction that was India's largest-ever affordable housing finance investment at the time.
Exits without IPOs
Even in a sluggish IPO market, Kedaara maintains a strong exit momentum through strategic sales and sponsor-to-sponsor transactions, Kejriwal said. In certain cases, such as with Lenskart, the firm also utilizes continuation vehicles or secondary structures to extend its holding period for specific portfolios, he added.
"No matter which stage of the cycle you're in, you always have a few primary sources of exit. One is the IPO markets, which is the most common. You can also sell companies to strategic buyers or to other sponsors, financial investors, or private equity players," he said. "So I think in the current market, IPOs may have slowed down a little bit, but the exit activity doesn't decrease."
In late April, Kedaara's portfolio company, Bengaluru-based logistics startup Porter, said it would postpone its IPO until regulatory clarity improved and competition settled, despite being financially ready to go public.
Putting this into perspective, Kejriwal noted that for Kedaara's exits, the business readiness of its portfolio companies influences timing far more than external market fluctuations. "Key prerequisites include operational scale, institutionalized financial systems capable of sustaining compliance standards, and established management teams, including those for investor relations," he said.
Beyond Porter, Kedaara invested in companies such as Impetus Technologies, JusPay, and Axtria in 2025. In 2026, it became the first-ever external investor in Axis Finance, picking up a 5% stake for ₹750 crore. On 7 January, Mint reported that Kedaara was set to acquire a majority stake in Tynor Orthotics at a ₹3,500-4,000 crore valuation. Kedaara's investment team currently manages and advises around $6.5 billion in total assets.
Playing the long game
The company's confidence in its strategy despite market turbulence stems from the long-term cycle of typical private equity funds. Operating on a 10- to 12-year timeline that covers fundraising, deployment, operational growth, and asset divestment, the firm ensures that short-term volatility does not disrupt its core investment principles. In 2025, when valuations were high, Kedaara Capital increased its distributions to paid-in capital (DPI) relative to the preceding year, Kejriwal said.
A Mint report on 2 June said global uncertainty and a softer IPO market is already pushing more companies toward private market transactions, even though investors are taking longer to close deals amid sharper scrutiny of valuations and earnings resilience.
Grant Thornton Bharat's Q1 2026 dealtracker showed M&A deal value fell sharply to $6.9 billion from $17 billion in the previous quarter, despite volumes remaining broadly steady at 271 transactions versus 277, as the number of high-value transactions slumped. The number of deals valued above $100 million fell nearly 60% quarter-on-quarter, the report said.
"We continue to deploy capital into core sectors where we possess operational familiarity, specifically financial services, consumer goods, healthcare, and technology services," Kejriwal told Mint. The firm explicitly avoids investing in infrastructure assets and other sectors which it feels may be heavily regulated.
Financial services remains core focus
In the financial services sector, which Kejriwal characterizes as a leveraged proxy for India’s long-term macroeconomic expansion, Kedaara focuses on underpenetrated verticals. "If you believe in the India long-term macro story, you can't afford not to be in financial services, because it is the best leverage play on India’s growth," Kejriwal said. “Credit and financial products are still underpenetrated, and there is so much more to be done. Within the sector, we have built enough expertise and reputation that if it is a deal we want to do, we don't normally lose it.”
Kedaara's confidence in securing deals relies on the fact that its cost of capital is nearly identical to those of international asset managers. Kejriwal said Kedaara draws from similar global limited partner pools and operates under equivalent return thresholds.
"The competition emerges primarily with sovereign wealth funds and pension boards that possess permanent capital structures and lower hurdle rates, allowing them to outbid traditional funds on specific assets. But we frequently co-invest or transact with these entities," he explained.
Regarding artificial intelligence (AI) integration, Kedaara avoids deployment of centralized technology officers to mandate software adoption across its holdings. Instead, individual investment deal teams assess the specific operational disruptions and commercial opportunities unique to each portfolio company's business model. Kejriwal noted that private-equity-backed enterprises generally adapt faster to technological disruptions due to structured board oversight and access to specialized operating talent within the fund's technology division, which mitigates execution risks during transitional periods.