Private equity firms expect funding strategy shifts amid West Asia war concerns, AI impact

Mukesh Mehta, senior managing partner at Blackstone said India will always trade at a premium to global markets, but will always manage to deliver one of the best returns across geographies.

• PE firms urge strategy rethink amid rising geopolitical risks.
• India remains attractive for PE despite global uncertainties.
• AI disrupts traditional tech investments in PE portfolios.

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Private equity (PE) firms and limited partners (LPs) including KKR, Pantheon, Kedaara Capital, and Blackstone weighed in on need to rethink investing strategies as geopolitical uncertainties become the new normal.

The top executives of these firms were speaking at the Indian Venture and Alternate Capital Association (IVCA) Conclave 2026 in Mumbai on March 10.

Kunal Sood, Partner, Pantheon called the ongoing US-Israel-Iran war a multi-dimensional challenge that will disrupt supply chains too. He added that this could get double whammy for India having a long term implications as its own neighbours Pakistan and Afghanistan too are at war.

According to Simrun Mehta, managing director, KKR, the ongoing geopolitical risks have become more consistent than sporadic, and PE strategies should build that in while thinking about underwriting as long-term investors.

She added that despite these challenges “India is still a very exciting place to invest in.”

“We are benefiting from some of the fundamental road drivers, our demographics, rising income levels, deepening capital markets,” she said during a panel discussion moderated by Ashley Menezes, COO, ChrysCapital.

The top executives of private equity firms were speaking at the Indian Venture and Alternate Capital Association (IVCA) Conclave 2026 in Mumbai on March 10.

Mehta added that PEs would first need to invest and build businesses which are fundamental to India’s growth in areas such as consumer, healthcare services and financial services. These businesses will be set up for the next 10-20 years and not a five-year period, a strategy that KKR follows, she said.

“Management teams need to focus on the growth and execution of the business, balancing liquidity risk or refinancing risk. Therefore, it's very important to have a strong and resilient capital structure. And thirdly, just prepare businesses for exit optionality,” she said.

“In a strange way I am actually more excited as a big investor in India today than I was three months ago when things were relatively nicer around the world. But only as an investor not the humane part of life,” Manish Kejriwal, managing partner and founder of Kedaara Capital concurred.

Kejriwal added that Kedaara Capital chose to put the brakes on new deployment and accelerate exits in certain portfolio companies to sail through the macroeconomic headwinds.

“We were lucky. We got $500 million out in the markets, back to our investors and LPs, and then the markets have frozen and that price has gone down by 25%. But as an investor now, in the next six to 12 months, I think I would be very, very opportunistic, looking at the silver lining in a very great ground on what we can be deploying,” he said.

Mukesh Mehta, senior managing partner at Blackstone said India will always trade at a premium to global markets, but will always manage to deliver one of the best returns across geographies.

“These premium valuations will continue in Indian market. That's a pure function of high return on equity and growth. When you have both together, it will lead at peak,” Mukesh said.

“Last year, Nifty was trading at 25 times price earning. Today it's trading at 20 times price earning. I believe public markets have corrected and like all cycles we have seen in private equity, there's a lagger between private market and public market. At some point of time, private market will start reflecting public market multiples,” he added.

AI-led disruption

Sood also emphasised on another major disruption that is parellely challenging the sector. Software-as-a-service (SaaS) and IT services is one of the core areas of PE investments that’s facing AI-led disruptions, set to overthrow traditional tech services models.

“Software is a big part of portfolios of most private market investors. When you see such sharp corrections, you're really questioning how this will play out in the future. When you say billions of dollars invested, a lot of it came in 2021 at peak valuations. A lot of these companies are of high leverage as well. And now you would expect them to be in a race against time to find a solution to use AI in their business and compete with AI-native companies. Something like this has had a ripple effect into private credit,” Sood said referring to the IT stock rout globally in the last 30-40 days following Anthropic’s new Claude launches.