Investcorp, the alternative asset manager that lists Mubadala Investment Company as its biggest shareholder, is bullish on India and plans to boost its investments in the South Asian nation amid new opportunities, according to a top executive from the company.
It aims to do two to three deals a year with an investment ranging between $50 and $75 million per deal, Gaurav Sharma, head of India investment business at Investcorp, told The National.
He, however, did not provide a total investment figure for the next five years saying it is “tough to say what that exact number is going to be”.
“There could be a year where we don’t do any investments, not because we don’t want to, because we haven’t found the right one,” Mr Sharma said.
“So it’s very difficult for me to give a number. My ideal scenario is to do two to three deals a year.”
Business services, healthcare and pharma, technology, consumer, and industrials and manufacturing are some of the sectors that are being targeted for investments.
The company has made $1 billion worth of investments in the private equity space in the last few years in mid-market companies in India. These include: NephroPlus, Global Dental Services in healthcare; FreshToHome in e-commerce; and Unilog and NuSummit in technology.
Last month, it bought 20Cube 3PL Solutions, a digital contract logistics platform, in a deal valued at about $53 million.
“We do feel manufacturing industrials is a good area to invest in. We have one investment in a company called Canpac, which does paper packaging for its customers. So that is a sector we’re spending a lot of time in as well, and could be an area of focus for our next fund.”
The company evaluates more than 150 companies every year before selecting two or three companies, Mr Sharma added. “If we do three investments a year, that’s a very good year for us.”
Investcorp buys a minority stake of 10 to 40 per cent in a company or acquires majority stake.
India-focused fund
It is funding new deals through an India focus fund, with the capital coming in from different sources including global institutional investors, investors from Gulf countries, private wealth franchises, Indian investors, life insurance companies, banks and family offices.
The company is currently investing through a $500 million fund and it is in “midway in terms of deployment from that fund”, Mr Sharma said.
“We have another four or five deals to do before we exhaust that fund, and then we’ll raise the next one.”
Set up in 1982, Investcorp invests through its six business lines: private equity, real estate, absolute return investments, infrastructure, credit management and strategic capital. It currently manages about $62 billion in assets, including those managed by third-party managers. It has operations across the US, Europe, the GCC and Asia.
Bullish on economy
India is one of the fastest growing economies in the world, providing new opportunities for global investors to increase investments.
UAE-based companies are betting on India with Abu Dhabi-based International Holding Company and Dubai-based port operator DP World boosting investments in the South Asian nation.
Interest has gone up after the UAE and India signed the Comprehensive Economic Partnership Agreement in 2022.
“India has consistently been getting about $30 billion to $35 billion of private equity coming in every year, and that really hasn’t changed,” Mr Sharma said.
“If you look at the current deal environment, there are good opportunities, there’s more capital to be deployed in India, whether it is from the global private equity funds or with Indian domestic PE funds.”
Indian economy grew by 7.8 per cent in the quarter through June despite the Iran war, which has disrupted flow of oil and liquefied natural gas to global markets and caused prices to spike.
Its economy is projected to grow by 7.1 per cent this year and by 6.5 per cent next year, according to the International Monetary Fund.
“I’m not surprised we’ve seen a 7 per cent-plus growth in India this quarter, because we see it in our portfolio as well. On an average, our portfolio’s top line continues to grow anywhere between 20 and 40 per cent,” said Mr Sharma.
“So given that growth and the opportunities set in India in certain sectors that we like, we are definitely bullish and very optimistic about continuing to invest in India as actively as we’ve been doing in the last few years.”