MC EXCLUSIVE A choppy economic environment can often be a great time to deploy capital: Samara Capital’s Abhishek Kabra

While global noise, including trade tensions, can cause temporary disruptions, the fundamental shift we are witnessing is a move towards greater national self-reliance.

Countries are now investing in domestic infrastructure and manufacturing capabilities and capacities to reduce dependence on global supply chains.

India is actively pursuing this trend by striving for self-reliance across a range of sectors, including semiconductors and electronics. This presents new investment opportunities for mid-market buyout funds like us.

Despite the unpredictability in global trade dynamics, India continues to strengthen its global position. A recently finalised FTA (free trade agreement) with the UK and ongoing negotiations with the EU, expanded trade agreements with Australia and active discussions with the US, ASEAN, New Zealand and others are bringing India closer to key trading partners.

Interest rates in India are also falling, backed by a steady decline in inflation. This creates a favourable environment for consumption and investment. As the monetary policy interventions transmit through the economy, we remain optimistic about the Indian economic outlook for next six-12 months.

Are you in deal-making mode right now or taking a more cautious approach, given the uncertainty?

We are long-term patient investors. We raise committed capital and draw it only when we get the right opportunity that aligns with our investment criteria. This gives us the patience to be selective and the ability to move quickly when we find attractive businesses to invest in at the right valuations.

Contrary to general perception, a choppy economic environment can often be a great time to deploy capital, particularly when the noise overshadows intrinsic business value. We maintain our focus on core investable sectors while continuously identifying bottom-up investment opportunities with the potential to generate alpha.

In private markets, valuations tend to be less volatile. The five-year rolling data for private equity in India shows rising deal activity and capital deployment.

Can you tell us more about your roll-up strategy?

Roll-ups are a central part of our strategy at Samara Capital. This allows for acquiring and merging multiple smaller companies within the same industry to create a larger and more competitive entity. Globally, roll-ups have proven to be an effective strategy for buyout-oriented private equity funds like ours, offering benefits such as scale efficiencies, operational improvements, revenue synergies, and valuation multiple arbitrage.

India has many sectors which remain fragmented and unorganised. Mid-market companies in such sectors lack ability to attract and retain professional management and drive economies of scale.

Samara steps in to consolidate these businesses, upgrade talent, and unlock value through synergy. We adopt a structured approach for business transition and transformation informed by our governance framework and tech and product mindset and led by Samara’s operations team.

At Samara Capital, we have pioneered the roll-up model in India, executing such strategies across multiple sectors, including food services, staffing solutions, personal care, healthcare delivery, and general insurance broking, among others. For example, in Sapphire Foods, we combined eight sub-scale Yum! Brands franchisees to create a leading, professionally managed quick-service restaurant (QSR) chain, which has since been successfully listed.

Another example is Marengo Asia Hospitals, where we are building an integrated chain of multi-specialty hospitals by acquiring or partnering with standalone facilities.

With the IPO market regaining momentum, how will it impact deal flow or exits?

Promoters committed to their business will wait for the right time to list but others seeking an exit will turn to private markets.

Buyout funds like Samara are well-positioned here. We offer flexible deal structures — promoters can stay on in a minority role, unlike a strategic buyer that may require full control. We also minimise disruption to management teams, which can be an issue in M&As.

So, IPO cycles don’t overly impact our new deal activity. Our focus remains on intrinsic value, not public market sentiment. For exits, we selectively tap into IPO markets when we find substantial arbitrage in private and public market valuations.

You have been focusing on consumer and retail, healthcare and pharma, financial services and business services and technology sectors. Why these four?

These four sectors represent 90 percent of total PE deals in India and align with two major themes we've identified: the shift from unorganised to organised sectors driven by India's economic formalisation and rising penetration across categories driven by awareness, access and affordability.

Our team is organised by these sectors for deep research and insights. We focus on annuity-like, secular businesses that are largely immune to short-term disruptions and offer consistent free cash flow generation with asset-light scalability. We avoid businesses dependent on order books, licences, or government tenders.

More importantly, we target mid-market companies in these sectors that have hit growth plateaus due to founder dependence, lack of systems, or geographic limitations — precisely where our business building approach of professionalising, scaling, and institutionalising creates the most value.

Let’s look at the consumer space. With so many shifts — D2C, quick commerce, premiumisation and sustainable consumption — how do you choose where to invest?

The consumer landscape has changed dramatically. Distribution moats have weakened, thanks to e-commerce and quick commerce, and consumers are more experimental and less loyal to legacy brands.

This creates opportunities but we're selective. Many D2C brands are still buying growth through promotions without sustainable unit economics or repeat purchases. We look for businesses with genuine product-market fit and clear paths to profitability. Our focus is on categories with pan-India appeal but low penetration where we can build scale advantages. For example, we backed Esme Consumer — beauty and skin care platform comprising Blue Heaven and Nature's Essence — because it serves the mass market with quality products at accessible price points. The category is large, under-penetrated, and growing.

Similarly, our investments in More Retail, backed by Samara and Amazon, and Sundrop Brands followed the same logic — find brands with democratic appeal, build operational scale, and create cross-selling opportunities.

In More's case, we're building India's best omni-channel food and grocery platform. With Sundrop Brands, we're consolidating brands like Act II popcorn and expanding through acquisitions like Del Monte.

The key is finding businesses that can achieve scale efficiencies while serving real consumer needs in large, under-served markets.

But isn’t your strategy contrary to the post-COVID premiumisation trend?

Not really. Both trends are playing out. Premiumisation is gaining ground in well penetrated categories where you grow via pricing. Mass-market plays, on the other hand, are about under-penetration and volume growth.

We see opportunities in both. The premium segment in India may target top 100 million people in India. The mass segment addresses the next 500 million. If the category is under-penetrated and the business case is strong, we’re happy to back mass market plays.

How are you looking at manufacturing bets in the China+1 context?

We have researched evolution of manufacturing-led businesses and have developed preference for derivative opportunities that benefit from manufacturing shift without taking direct risk. We also prefer brand-led or annuity businesses which suit our investment horizon.

That said, we invested in Sahajanand Medical Technologies, a med-tech company with R&D and exports as its backbone. We helped institutionalise it, scale up internationally, and now over 65 percent of its revenues come from outside India. It’s heading to the IPO markets.

Another example is Sekhmet Pharmaventures, a roll-up of API players built on the China+1 story. Here too, our goal is to create operating scale, reduce costs and build a platform that can sustain over time.

Within the China+1 theme, what is your view on electronics manufacturing?

It's a massive opportunity but we look for the 'picks and shovels' plays rather than direct electronics manufacturing. We prefer ancillary businesses that benefit from this trend without the heavy capex and cyclical risks.

We're looking at specialised companies that often have better unit economics, are more capital-efficient and align with our preference for annuity-like revenue streams.

The key is finding businesses that are essential to the electronics manufacturing ecosystem but have stronger moats — whether through specialised expertise, regulatory requirements, or network effects. That's where we can create more sustainable value compared to competing for the obvious, already priced-in manufacturing assets.

How has Samara performed in terms of returns and capital distribution?

Our 2014 vintage fund made 10 investments. We’ve exited nine of them, with the tenth one close to an exit. In eight of those nine exits, we have delivered over 2.5x multiple on investment as returns. We haven’t lost money on any transaction.

The overall MOIC is 3.5x and gross IRR is around 25 percent over five-and-a-half years. We focus on consistent, long term, risk-adjusted returns in low-beta sectors like healthcare and consumer.

Is your current fund fully deployed?

We are currently investing out of our third fund, which we have also opened for the first time to domestic institutions, family offices and UHNIs. We will look to close the fund raise in next three to four months. From this fund, we have made an investment in Marengo Asia Healthcare, our roll-up play in multi-specialty hospitals.

With more public market names entering private equity — celebrity fund managers and wealth firms launching AIFs — do you see increasing competition for domestic capital?

Private equity investments within the ‘alternates’ space is picking up as an asset class with better awareness and access. Public or pre-IPO investing is passive, minority style. It can work for star managers who are good at identifying companies and sectors to invest in but buyouts are different. Here, control, structuring and operational execution matters as well.

At Samara, we operate as a team. Eight partners across investments and operations collaborate to source, manage, and exit deals in a fund. It’s not a one-man show. And as domestic capital matures, we expect more institutions and HNIs to allocate to control-style PE for superior risk-adjusted returns.

Many of your peers have diversified into credit or public equities. Will Samara also evolve into a multi-product platform?

For now, we are focused on mid-market buyouts. That’s where our strength and experience lies, and that’s the only fund we are raising currently.