Global funds are likely to channel a significant chunk of the funds raised for the Asian market towards India in 2024, said Manish Kejriwal, Founder and Managing Partner, Kedaara Capital.
"Global firms have raised a large pool of capital for deployment in Asia. Historically 40-50 percent of this was going to China, which will now pivot towards India and Japan, at least for the short term," said Kejriwal while speaking to Moneycontrol at the World Economic Forum in Davos.
Kejriwal's optimism comes at a time when the industry is hoping that private equity (PE) and venture capital (VC) players will drive robust fund flows into the Indian market after a muted 2023.
Investments by PEs and VC funds as of December 20, 2023, fell to a low of $27.9 billion across 697 transactions, versus $47.62 billion in 2022 across 1,364 deals.
Experts had termed the funding slowdown a temporary adjustment and expected green shoots in 2024.
Speaking of global funds, Kejriwal referred to Bain Capital’s recent close of its $7 billion pan-Asia PE fund, and another one that’s in the offing by KKR, worth $7-8 billion. Further, US private equity behemoth TPG is expecting the final close of its $6 billion eighth flagship Asia buyout fund in the first half of 2024.
"The money that was going to the rest of Asia will now come to India. You will see the size of their (global PE firms’) India teams increase to deploy that capital," Kejriwal added.
Adding to this, he highlighted another trend in the space, wherein global funds take up a multi-asset strategy.
"In 2024, you will see more global funds becoming multi-asset. Instead of just doing private equity and real estate, they will go for infrastructure and private credit," he explained.
Kedaara, which is in the market for its fourth fund worth $1-1.5 billion, currently advises and manages over $3.5 billion in assets across the consumer, financial services, pharma/healthcare, and technology sectors.
The PE firm had raised a record $1.1 billion for its third fund in 2021 and has invested more than 60 percent of the same across firms like Oliva Skin and Hair Clinic, Avanse Financial Services, online beauty products platform Purplle, eye care chain ASG, and others.
"In general, fundraising, new investments, and exits were lower in 2023 than in previous years. But at Kedaara, it was the best year. We deployed more than $450 million across five deals, and co-invested $125 million at a time when the environment was not strong,' he said.
The PE firm recently picked up a significant minority stake in edtech firm K-12 Techno Service and plowed $229 million into B2B SaaS firm Perfios, a fintech.
It has also received the Competition Commission of India’s (CCI’s) nod for the acquisition of 1.74 percent in the Peyush Bansal-led eyewear unicorn Lenskart.
Regarding his investment thesis for 2024, Kejriwal said: “We have never invested in a listed company. We will stick to our game plan and do more deals in our sweet spot [mature unlisted firms]. We don’t aim to turn around a sick company and make it better. We will take a strong one with strong management. We will stick to traditional private equity.”
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