Jefferies bets India’s next big wealth engine will be infrastructure, not IT
Jefferies sees a decade-long shift from services to hard assets as India ramps up spending on airports, housing, energy, and global supply chain integration.
NEW DELHI: For global investors, India has long been defined by software services and outsourcing—the country’s signature growth engine since the late 1990s. Jefferies believes that story is giving way to a new one. Over the next decade, the firm expects wealth creation to shift decisively towards “hard assets" — airports, ports, hospitals, homes, hotels, real estate, and renewables, as India pours capital into building its infrastructure backbone.
“The one thing that India was missing, and that every investor has always pointed out, is infrastructure," said Aashish Agarwal, country head of India at Jefferies, in an exclusive conversation with Mint. “I think we are now at the cusp of infrastructure upgrade. So, what services have been for the past 20 years, I think hard assets will be for the next 10 to 15 years for institutional investors."
Jefferies’ thesis rests on three broad pillars: infrastructure, hard assets, and consumption through travel and tourism. Agarwal said the best way to play consumption is no longer just staples or discretionary spending, “but through homes and hotels. It’s a very different India."
From services to hard assets—and India-plus-one in manufacturing
The pivot towards “hard assets" such as airports, hospitals, real estate, and energy transition reflects companies’ growing ability to self-fund growth, alongside a surge in infrastructure spending, Agarwal said.
That shift is also embedding India more firmly in global supply chains. Agarwal said outbound M&A could gather momentum in the coming years, noting that Indian companies have already been acquiring manufacturing firms abroad to build expertise as part of the China-plus-one strategy.
“It’s easier to export out of Europe than out of India, especially in more sensitive sectors like rail and defence," he said. Against this backdrop, “maybe some companies that are heavily dependent on exports would like to have an India-plus-one manufacturing base."
Jefferies has been involved in several marquee M&A deals over the past year, including Advent’s $1.64 billion sale of Bharat Serums & Vaccines to Mankind Pharma, HDFC’s $1.3 billion divestment of Credila to EQT, ChrysCapital’s exit from GeBBS Healthcare to EQT, and Apax Partners’ sale of Healthium to KKR.
Diversification, Agarwal added, isn’t only about trade disputes. “Even if the trade talks are resolved—which they should be—people would still like to diversify manufacturing going forward. Renewables could also be another area where you see outbound expansion. They’re already starting to setup some plants in the US."
“Even if the trade talks are resolved—which they should be—people would still like to diversify manufacturing going forward. Renewables could also be another area where you see outbound expansion. They’re already starting to setup some plants in the US."
Shifting capital flows
As trade and capital flows shift across Asia, India is emerging as a key beneficiary. The China-plus-one strategy is reshaping manufacturing partnerships and investments, with Indian firms positioning to capture a larger share of global supply chains.
“It’s early days with the China and India trade talks, but Indian corporates could create a major manufacturing hub. A number of Chinese companies may also look at creating manufacturing hubs in India or bringing on an Indian partner. We have seen some examples of this in the auto sector," said Chris Laskowski, head of Asia Investment Banking at Jefferies, who was also present during the interview.
With China’s access to Western markets narrowing, India and its neighbors stand to gain. “It can be very tough for China to go to the US and Europe these days. So, I think it’s Southeast Asia, the Middle East and India that are likely to be their focus areas for building out new markets and capabilities," Laskowski said.
Private equity flows, too, have undergone a sharp reallocation. Just a few years ago, China dominated Asia-focused funds, Laskowski pointed out. “Five years ago, if you looked at a global private equity firm with a large Asia-specific fund, 25-40% of that money was likely going to be invested in China. Now, it’s more like circa 5-10%," he said.
That shift has tilted the cards in India’s favour. “And that’s why a lot of those larger fundraisers have turned more towards India. They have found India to be very fertile ground," Laskowski said. From a private capital perspective, “India has really grown leaps and bounds—both for investing into new dynamic opportunities and for successfully exiting transactions via the public markets or through a trade sale."
Jefferies has also led some of the year’s largest equity raises, including Kedaara-backed Vishal Mega Mart’s $944 million initial public offering (IPO), EQT-backed Sagility’s $250 million IPO, and major qualified institutional placements by Motherson ($763 million), Varun Beverages ($890 million), and JSW Energy ($600 million).
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