MC EXCLUSIVE Investcorp's new Rs 5,000 crore PE fund to target mid-market buyouts, says India head Gaurav Sharma

Yes, we are excited to have closed our new private equity vehicle at around Rs 5,000 crore. This is a mix of offshore and onshore capital, with strong support from Indian institutions and family offices as well as global LPs. What’s significant is that several global institutions have backed us for the first time.

This is our first institutional-scale vehicle since the launch of Investcorp India in 2019. Earlier, we invested through a smaller pool and our balance sheet. With this new vehicle, we will build a portfolio of about 10–11 companies over the next two to three years. We’ve already closed four investments from it, so deployment is underway.

What is your portfolio construction strategy for this fund?

Private equity is ultimately a very micro game. Macros matter but execution and the management team matter more. For us, healthcare is a long-term theme. We’ve backed ASG Eye Hospitals, NephroPlus and Clove Dental and we see very strong tailwinds, as insurance penetration and healthcare spends in India remain low.

The second theme is professional and business services  —IT services, software and B2B manufacturing. Globally, Investcorp has done very well in this space and we see similar opportunities here. Our recent investments like NuSummit and Canpac fall into that bucket.

Consumer and consumer derivatives is another vertical. Wakefit is an example on the consumer side, while Canpac is a packaging play linked to consumption. Financial services also remain on our radar. We’ve done InCred and InsuranceDekho earlier and we are evaluating a new secured-lending opportunity now.

You’ve spoken about increased focus on buyouts. Why now?

The Indian market is evolving. Earlier, most private equity was growth capital but now second and third-generation promoters are more open to selling control. We’ve already done NuSummit as a full buyout and Canpac as a deal with 40 percent ownership where we are playing a significant role.

We’ll continue to do minority growth deals as well but our comfort with buyouts differentiates us in the mid-market. Many of our peers focus on larger cheques of $200–300 million plus, while our sweet spot is Rs 500–1,000 crore deals (roughly $50–130 million). That’s a white space where competition is limited.

Importantly, in India, buyouts are growth buyouts not leveraged buyouts. We often look at platform plays where we can add tuck-in acquisitions and scale organically too.

Valuations in India have always been expensive. How do you deal with that?

Yes, India is not a cheap market but we are disciplined. We’re happy to pass on deals where valuations don’t make sense. For us, it has to be a win-win with the founder. That’s why we avoid heavy auction processes where valuation is the only criteria. Some of our best investments have been proprietary or bilateral transactions. For example, Clove Dental was something we tracked for seven years before we invested. We built trust with the founder and struck a bilateral deal without bankers — that is the kind of approach we prefer.

The last few years have seen stronger exits for PE in India. How do you see the environment?

Exits have become far more robust. Earlier, India was criticised for being a one-way street, capital came in but didn’t go out. Today, we see double-digit billion-dollar exits annually.

Secondary transactions are easier with more buyout funds active and IPOs have become a viable route for PE-backed companies. We have two companies with DRHPs filed and are very encouraged by the market’s ability to absorb such listings.

How are Trump tariffs and global uncertainties affecting you?

There’s definitely collateral damage. Export-linked sectors such as textiles and gems & jewellery are hurting. IT services, too, are facing slower discretionary spend in the US but the offset has been strong domestic flows into Indian markets, almost 2x the foreign outflows.

As investors, we’re cautious on export-oriented businesses for now but domestic consumption remains a solid anchor. We see rural consumption holding up better than urban in recent months, which is why government GST relief was timely.

You’ve said Investcorp India is different because you raise money locally. Can you expand?

Absolutely. Unlike some global funds that pool capital centrally, Investcorp has local vehicles in every geography, the US, Europe, the Gulf and now India. In India, our senior team is entirely local and we raise capital domestically.

That makes a big difference when we speak to Indian institutions. Insurance companies, banks and family offices have supported us because they see us as a truly Indian platform, not outsiders.

And increasingly, family offices also want exposure to global alternatives and our strategies in the US and Europe.. Given Investcorp’s 40 plus years of track record in the US and Europe, we’re well placed to channel that demand in a compliant way.

How are you building the team for this next phase?

We’re about 12 investment professionals today, including three MDs. The investment bench is strong but buyouts require deeper operating expertise. That’s why we’re building a pool of operating partners and advisers.

For example, Vivek Agarwal, former president of Tech Mahindra, is an operating partner with us at NuSummit. We are also bringing in a senior healthcare leader to mentor founders in our healthcare portfolio. Our philosophy is to treat every investment, minority or majority, as if we are partners, and to add value wherever possible.

What is your assessment of the competitive landscape in Indian private equity?

We see a white space emerging in the $50–$150 million buyout segment. Larger funds have moved up the curve and are writing much bigger cheques, which leaves mid-sized buyouts relatively less crowded. In India, these are often growth buyouts or platform builds, not traditional leveraged deals.

On the minority side, competition has actually increased with a number of newer mid-sized domestic funds entering the market. Our flexibility to back both buyouts and minority opportunities gives us an edge in navigating this evolving mid-market.