India’s buyout market hots up

Firms completed at least $5.8bn of private equity, infrastructure and real assets buyouts last year, more than the previous four years combined, according to EMPEA data.

India’s buyout market exploded last year, according to new research.

Firms completed at least $5.8 billion of private equity, infrastructure and real assets buyouts last year, compared with $5.4 billion in the previous four years combined, EMPEA’s Industry Statistics Year-End 2018 found.

Madison India Capital, Indian trader Rakesh Jhunjhunwala and Westbridge AIF’s $880 million buyout of Star Health & Allied Insurance in October was the country’s largest pure private equity buyout of the year. Kedaara Capital and Partners Group also joined forces in September to acquire Vishal Mega Mart for $735 million.

Blackstone president Jonathan Gray is a “big believer” in India and the firm will be accelerating its activity there, he wrote in The Economic Times in February.

India has been one of Blackstone’s top performing geographies globally for private equity, Gray said. It’s invested more there – nearly $10 billion across private equity and real estate – than in any other emerging market.

Buyouts accounted for about 25 percent of capital deployed in India between 2015 and 2017, up from 6 percent from 2009 to 2011, according McKinsey & Company’s Indian Private Equity: Coming of Age in November. Indian exit values rose from $6.9 billion in 2015 to $10.8 billion in 2018.

“India has always punched above its weight among emerging markets, in terms of private equity deployment relative to GDP,” Vivek Pandit, senior partner and global co-leader of the private equity and principal investor practice at McKinsey, said in a statement.

“We are finally seeing focus and discipline setting in with improvements in returns and exits driven by control-oriented strategies, better sector and owner selection, faster and more purposeful interventions.”

Bahrain’s Investcorp acquired an Indian private equity and real estate unit in January as its first deal in the country. The firm secured regulatory approval to buy the investment management arm of IDFC Alternatives in a deal that involved approximately $430 million of assets under management across private equity and real estate.

India-focused funds collected $3.2 billion across 16 vehicles last year, up from $2.6 billion in 2017 but less than the previous two years, according to PEI data. ChrysCapital raised $867 million for its eighth India-focused vehicle in January, exceeding its $850 million hard-cap.