(From left) Mint consulting editor Rajrishi Singhal, Warburg Pincus MD Vishal Mahadevia, Kedaara Capital managing partner Manish Kejriwal, TriLegal partner Nishant Parikh, Aion India Investment Advisors senior partner and MD Parth Gandhi, Chrys Capital partner Sanjay Kukreja, Apax Partners partner Shashank Singh, Kroll MD and head (South Asia) Tarun Bhatia, and True North managing partner Vishal Nevatia, at the Mint India Investment Summit 2019 in Mumbai on Thursday. (Mint)
(From left) Mint consulting editor Rajrishi Singhal, Warburg Pincus MD Vishal Mahadevia, Kedaara Capital managing partner Manish Kejriwal, TriLegal partner Nishant Parikh, Aion India Investment Advisors senior partner and MD Parth Gandhi, Chrys Capital partner Sanjay Kukreja, Apax Partners partner Shashank Singh, Kroll MD and head (South Asia) Tarun Bhatia, and True North managing partner Vishal Nevatia, at the Mint India Investment Summit 2019 in Mumbai on Thursday. (Mint)

Private equity investors look to allot  more  funds  for  buyout deals

  • Promoters becoming more comfortable in selling biz, say investors at Mint India Investment Summit
  • India’s private equity market, which was largely led by minority investments, has seen majority deals grow to contribute around a quarter of all PE deals last year

Mumbai: Private equity (PE) investors in India plan to deploy more capital in buyout transactions as more promoters are becoming comfortable in selling their businesses, said top PE investors on the first day of the Mint India Investment Summit 2019.

India’s private equity market, which was largely led by minority investments, has seen majority deals grow to contribute around a quarter of all PE deals last year.

“Today 80% of our investments are buyouts and only 20% are minority deals. As and when the market presents the right opportunity, we would want to do only buyouts," said Vishal Nevatia, managing partner, True North, a home-grown PE fund.

Earlier this week, True North bought a majority stake in health insurer Max Bupa for over 500 crore. An increasing number of promoters are willing to divest their businesses entirely or sell a controlling stake as they recognize a PE firm can add value to their businesses, according to Manish Kejriwal, the co-founder and managing partner of Kedaara Capital.

Kedaara has been an active investor in the buyout space with deals such as Vishal Mega Mart, for which it paid more than 5,000 crore along with Partners Group and auto components maker Sunbeam Auto.

“PE firms bring a different skill set to the business as they have managed such businesses previously elsewhere. As control investors, a PE fund will look at M&A (mergers and acquisitions) and roll up acquisitions to create a market leader. There is a lot of value add that goes into a buyout or control deal," said Shashank Singh, partner and head of India at Apax Partners.

The value addition from PE firms comes in the form of growing ability to attract better talent.


Promoters today realize that bringing in institutional capital is a necessary way to attract high quality talent, said Vishal Mahadevia, managing director and head of India at Warburg Pincus.

“Promoters are saying, let’s get institutional capital, lets sell 60% and keep 40% with us and we will be able to attract a high quality management team," he said.

Corporate groups looking to sell non-core assets and the availability of professional management teams are also helping, said investors.

“Large groups, multinational corporations want to sell certain assets, and they provide for more buyouts. Additionally, the availability of professional management teams that one can bring in to acquire an asset, that too has increased significantly," said Parth Gandhi, senior managing partner, AION India Investment Advisors.

As the stigma of selling businesses is reducing, “we are seeing more buyouts which will only increase", he said.

However, the investors at the summit said that the trend of buyouts could receive a further boost if certain regulatory and policy changes were implemented.

“Availability of leverage is an issue. It is available in some sectors, but if this can be resolved, it could open floodgates," said Sanjay Kukreja, partner and CIO at home-grown PE firm ChrysCapital.

Kukreja said co-investments by limited partners, investors in a PE fund, is also helping Indian fund managers look at larger deals.

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