Emerging Trends in Indian Private Equity
Siddharth Mody of JSA, along with Tarun Khanna of CX Partners and Mahesh Parasuraman of Amicus Capital, discuss emerging trends in Indian private equity, focusing on control deals, ESG integration and the impact of artificial intelligence.
Tarun Khanna
Mahesh Parasuraman
The discussion outlines the shift towards control deals as a significant trend, driven by the desire for more strategic influence, better governance, and range of exit strategies. This transition is inspired by global market practices and is seen as a means to leverage available senior management talent in sectors such as healthcare, IT services, and financial services.
Tarun Khanna highlights the evolution of the Indian private equity landscape from minority-driven to more control and buyout deals, reflecting on CX Partners’ journey and their strategic moves towards acquiring controlling stakes in businesses. This approach allows private equity firms to implement governance standards, drive strategy, and ensure optimal exit routes, overcoming limitations experienced in minority deals.
“When you buy into a business, you need to document where ESG compliance stands across departments. If compliance doesn’t increase during the period of your investment, that's a red flag.”
Mahesh Parasuraman underscores the significance of ESG (environmental, social, and governance) factors in investment decisions. Amicus Capital has integrated ESG considerations throughout the investment lifecycle, emphasising risk mitigation and governance enhancement. ESG compliance is not just a moral or ethical choice but a strategic one that enhances business value and facilitates exits by showcasing well-run companies to potential buyers or the public markets.
Both speakers also touch upon the role of AI in evaluating and managing investments. AI’s predictive capabilities and operational efficiencies are increasingly crucial in sectors like financial services. However, they also express caution about the rapid evolution of technology and the need to back the right founders – those who can adapt and drive business model changes in response to technological advancements.
“While there’s a lot happening in the AI space, investors or funds are not necessarily at the point where they can go in and back these projects, because that requires a very different portfolio construct – one that doesn’t lose capital.”
The conversation reflects a comprehensive view of the evolving dynamics in Indian private equity, emphasising strategic control for value creation, the integral role of ESG in modern investment practices, and the growing importance of technology and AI in shaping business strategies and operational efficiencies.
JSA
