Investcorp aims to double private equity investments in India

Alternative asset manager plans to invest $300m in the next two to three years to boost its portfolio in the country, a top executive says

Investcorp. Courtesy Investcorp

Investcorp, the alternative asset manager that lists Mubadala Investment Company as its biggest shareholder, plans to double its private equity investments in India as it looks to grow its portfolio in Asia’s third-largest economy, a senior company executive said.

The Bahrain-based company is looking at new deals in healthcare and pharmaceuticals, consumer tech and FinTech, Gaurav Sharma, head of private equity at Investcorp India told The National.

Investcorp has so far invested $300 million in eleven companies in India, which include logistics start-up Xpressbees, e-commerce platform FreshToHome and healthcare company NephroPlus, among others.

“We want to continue the pace of deployment we had in India in the last couple of years and will be looking to deploy that kind of capital [$300m] in the next two or three years as well to grow our assets,” Mr Sharma said.

Investcorp had assets under management worth $37 billion as of June 30 and continues to boost its investments around the globe. It made five new private equity investments in the US and Europe, two add-on acquisitions and 11 investments in businesses across Asia in the 12-months to the end of June.

The company’s investments in India this year included Unilog, which provides e-commerce solutions to small and medium businesses based in the US, for an undisclosed sum. It also agreed to invest $10.36m in Mumbai-based luggage and bag company Safari Industries.

Investcorp is looking to close at least one deal by the end of December in the pharmaceuticals sector, Mr Sharma said. A deal related to consumer-packaged goods is also being finalised. He declined to disclose additional information.

“India in terms of overall growth continues to be one of the fastest growing large economies of the world,” he said. “Twenty unicorns have come into being in India this year.”

The second-most populous country in the world continues to recover from the impact of the coronavirus pandemic as infections drop from their peak levels in April and May.

Last week, Moody’s Investors Service revised its outlook on India to stable from negative, saying downside risks had been reduced. The ratings agency affirmed the country's Baa3 sovereign rating due to its large and diversified economy with high-growth potential, its strong external position and a stable domestic financing base for government debt, against its principal credit challenges.

India's economy is forecast to grow 9.5 per cent this year, according to the International Monetary Fund's World Economic Outlook published in July.

Investcorp plans to raise additional funding for FreshToHome to expand its operations in the Gulf Co-operation Council and in India, after investing in the Bangalore-based start-up along with other investors last year.

“We are looking to raise $200m and are working with a global investment bank,” Mr Sharma said.

The company is receiving “a lot of inbound interest from investors globally and that is the reason why we think it is a good time to raise more capital and be more aggressive in terms of growth plans both in India as well as overseas”.

FreshToHome, which is also active in the UAE, sells fresh fish, meat and vegetables to customers. It sources the products directly from fishermen and farmers and has recorded a boom in business amid the pandemic.

Investcorp also plans to list FreshToHome, logistics start-up Xpressbees and healthcare company NephroPlus, said Mr Sharma.

“At some point they will go public. The question is of timing and the right market to take public FreshToHome, Xpressbees and NephroPlus.”

The market is “extremely dynamic in India with food delivery start-up Zomato going public at $9bn dollar valuation and getting listed in India with huge success and a lot of international investors coming on the public side”.

“The eco-system of private equity in India has really matured and evolved in a positive manner.”

Mukesh Ambani’s Reliance Industries attracted a large pool of investment from around the world last year. Its digital and retail units won over investors such as Mubadala Investment Company, Saudi Arabia’s Public Investment Fund, Facebook, Google, Intel Capital and KKR.

Investcorp plans to fund new deals through its balance sheet, as well as through a $400m India-focused fund that it plans to introduce next year.

“We will launch an India growth private equity fund next year and want to continue investing in the range of $25 to $50m per investment.”

Updated: October 10th 2021, 8:19 AM