Domestic capital must anchor India’s PE future: Gaja Capital’s Gopal Jain

Gopal Jain, CEO & MD, Gaja Capital

Gaja Capital, a homegrown mid-market private equity investor in business for more than two decades, recently became the first Indian PE firm to file for an initial public offering (IPO).

In an interview to Moneycontrol, Gaja Capital chief executive officer and managing director Gopal Jain outlined the firm’s strategic focus on mid-market investments, with emphasis on technology as a "horizontal enabler". He also spoke about core themes such as education, fintech, consumer premiumisation, and the growing relevance of AI. Edited excerpts of the interview:

Which sectors or themes are you most bullish on for the next decade and how do these align with your portfolio? Is your investment strategy moving towards more tech-based businesses than traditional ones?

Gaja Capital is deeply focused on India’s mid-market where we pursue two types of investments: significant minority stakes in high-growth Series C companies and buyouts involving either existing or experienced management teams. While we are sector-agnostic, we have built deep expertise in education, employment, employability (EEE), consumer, BFSI, software and automation — sectors where we have a strong network and connectivity into the ecosystem.

Our approach to sector selection is methodical. We begin with research and coverage before allocating capital. For instance, we started tracking tech-enabled businesses in 2015 and made our first investment in a B2B education software company in 2018 (Educational Initiatives). This groundwork enables us to confidently allocate capital to tech in Fund IV and beyond.

Tech is increasingly central to our strategy — not as a standalone sector but as a horizontal enabler across industries. Our deal flow is increasingly influenced by growth-stage opportunities emerging from the VC ecosystem. AI, for example, is a theme we’re actively exploring due to its potential to drive productivity and transformation. We recently made an investment in Fractal Analytics, an AI-first tech services firm from India serving Fortune 500 clients. We believe technology is now integral to value creation across sectors and we treat this more as a horizontal capability that is a must-have across all companies.

Urban demand that was largely driving the Indian consumption story seems to be under pressure in some pockets. What is your reading of the situation, both in urban and rural areas? Are you betting more on consumption trends like premiumisation?

We do see signs of a consumer slowdown, particularly in urban pockets, driven by inflation, tight monetary policy, and constrained liquidity. However, this must be viewed in the broader context of India’s successful navigation of the COVID-19 crisis. The country maintained fiscal discipline and protected its balance sheet, and a temporary slowdown is a reasonable trade-off for such prudent crisis management.

Encouragingly, we’re seeing early signs of recovery, especially in premium segments. Consumer demand remains robust in several areas, and we are actively investing in opportunities that reflect this resilience. For example, our investment in affordable housing addresses a massive unmet need in India. Similarly, Eggoz, a leading branded eggs company, has the potential to become a category-defining brand, like Amul is to dairy.

Our strategy is to build businesses that serve the broader population, not just the top 1 percent. We believe deep competitive moats are built through customer-centric innovation, product differentiation, and execution excellence. As competition intensifies, relying solely on pricing or convenience is insufficient. Brands must deliver tangible value and compelling differentiation to win in the long term.

Also Read: Gaja Alternative Asset Management files confidential draft IPO papers

The education sector has been a key focus area for Gaja. Have returns from this sector been competitive with other sectors? With the Indian ed-tech sector going through a massive churn in recent years, what are the opportunities you see in this space?

Education, employment and employability (EEE) has been one of our most successful investment themes. Companies like Teamlease, Eurokids (now Lighthouse Learning), and Educational Initiatives have built strong market positions and resilient business models capable of delivering multi-decadal growth and attractive returns on capital.

Our software investments also intersect with this theme. Leadsquared, for instance, is a leading SaaS CRM platform for education and edtech companies in India and the US, with around 40 percent of its revenue coming from this sector. Amber, another portfolio company, operates a global student accommodation marketplace from India and is part of our study abroad investment thesis.

The recent churn in Indian edtech was anticipated. Many of the companies that struggled shared common issues: excessive capital or debt, unsustainable unit economics, and a lack of focus on learning outcomes. We believe the future of edtech lies in using technology to enhance educational outcomes at scale and at a cost that expands access. The work being done by our portfolio company

Educational Initiatives validates the premise that AI holds promise for personalised learning, real-time translation, and accessibility. With India’s large school-going and working-age population, the EEE sector remains a compelling long-term opportunity.

In the past, you have invested in financial services businesses, which were predominantly focused on lending. Your recent investment was Signzy, a digital banking infra company. When it comes to fintech, is Signzy the kind of deals that will define Gaja investment strategy?

Our investment in Signzy emerged from our investment experience in banking and reflects our belief in the growing importance of digital infrastructure in financial services. With 240 clients, including major banks, NBFCs, and fintechs, Signzy is scaling rapidly, especially in the Middle East.

We see a clear division of roles: banks should focus on delivering quality credit efficiently, while agile tech firms like Signzy develop targeted solutions. With SaaS pricing and API-based integration, banks can easily adopt these technologies. RBI’s sandbox initiatives have also encouraged tech adoption among banks. We expect many more software companies to emerge, built around the evolving needs of India’s BFSI sector.

Indian alternative fund managers are tapping domestic liquidity in a big way. Do you think the time of depending on foreign capital is over, especially for mid-market growth investors like Gaja?

We believe Indian GPs ( general partners-fund managers) and LPs (limited partners - investors in PE funds) must take the lead in investing in India. While foreign capital will continue to play an important role, domestic capital must become the foundation. In mature markets such as the US, Japan, China, and the UK, homegrown GPs and domestic LPs dominate the investment landscape.

India is 4 percent of the global economy and 7 percent of global savings. To harness this potential, two shifts are needed: connecting domestic savings to alternative investments and institutionalising Indian GPs. Simple regulatory reforms can enable banks, insurance companies, and pension funds to participate in alternatives, unlocking significant capital.

Gaja Capital has always operated with institutionalisation in mind. As a 20-year-old firm, we are structured to align with this evolution. We see a future where Indian private equity is truly Indian - driven by domestic capital, home grown expertise, and long-term commitment to building enduring businesses aligned with strategic national goals.