India, a growing emerging market nation with untapped resources and a sizable labor force, has attracted billions of dollars to its healthcare and commercial real estate, software, and textile industries. The country has experienced several unique restructurings and economic reforms that have helped stimulus. As of 2018, programs include demonetization, goods and services taxes, and the Aadhaar identification scheme, which is also supporting healthcare development. As such, the economy has several channels for new and existing private equity development.
India reported several milestones among its institutional investment banking and private equity businesses that are contributing to the investment industry landscape overall. Statistics from 2017 for Bain Capital show merger and acquisition activity in India increasing 53.3% to $77.6 billion, private equity deals at $24.4 billion, and $24.96 billion raised for publicly traded companies in the primary market.
- India has attracted billions of dollars into various industries, such as healthcare and real estate, and has several channels for new and existing private equity development.
- Blackstone is a private equity firm that helped add $1.7 billion into the country's healthcare and real estate industries.
- TPG invested $100 million into Shriram City Union Finance, which marked the first investment in an Indian financial firm.
India and Private Equity Investment
The introduction and involvement of private equity companies have been a force for injecting much-needed lifeblood into an array of sectors that previously relied on state dollars, limiting the operations of private financing and innovation. Private equity investment into businesses, such as hospitals and technology, improves the quality of services rendered and encourages better business management by decision-makers seeking further investments.
Some key areas of the economy seeing increased private equity investment and involvement include real estate and real estate investment trust (REIT) portfolios, e-commerce, social media, and online banking platforms. As of October 2020, India had approximately 112 private equity firms specializing in a range of sectors and investments. The firms below hold an office in Mumbai, which is India's largest city with a sprawling population of 18.4 million people.
While grappling with some of the worst wealth inequality in the world, Mumbai is also the wealthiest city in India, home to most of the country's billionaires and millionaires. As the financial and commercial capital of the country, it is only fitting that each of these firms has an office location in Mumbai.
Blackstone has invested over $13 billion in India through private equity and real estate, as of October 2019. While not all of its big-ticket ventures have turned profits, such as its ventures into Indian software company Financial Technologies and clothing company Gokaldas Exports, Blackstone's willingness to invest has prompted other success stories. This was the case with pharmaceutical company Emcure and outsourcing company Intelenet.
Blackstone investors consider themselves patient, and the company seeks long-term results. The PE firm's real estate purchases include a special economic zone (SEZ) in Pune, India, along with an information technology (IT) development in Noida. The purchase of these territories confirms Blackstone as the largest owner of office space real estate in India. Blackstone has cited these real estate purchases as being useful in the future of the creation of REITs.
Apax entered India in 2007 and helped land a $104 million investment into the healthcare industry, beginning with Apollo Hospital in Chennai. Apax took home a significant victory upon the sale of IT firm iGate for $4 billion, enabling a return of $1.3 billion on a 2011 investment.
In May 2015, Apax enacted a 23% stake in Zensar Technologies, which has made headway in India as a provider of IT services to manufacturers, retailers, and other technology companies. The deal comes after other IT sales and purchases by Apax, deploying a strategy in India that focuses on technology service companies. Zensar spokesperson have welcomed the purchase due to Apax's previous experience with Indian tech firms.
In 2018, the company reported investments in financing company Repco Home Finance Ltd. and healthcare company Healthium MedTech.
TPG's entrance into India has been particularly focused on the financial services industry. In 2006, TPG invested $100 million into Shriram City Union Finance. The deal marked a precedent for TPG; it was its first investment in an Indian financial firm.
In 2015, TPG earned four times its original 2008 investment by selling a 20% stake in Shriram City Union Finance to Apax. In February 2015, TPG announced it would purchase a minority stake in Manipal Health for $146 million.
The company operates hospitals in Western and Southern India. Global hospitals have also been on TPG's radar. PE companies are increasingly looking to Indian healthcare providers for investment due to the innovations evolving around Aadhar and in healthcare. The quality of care can vary, and investors are looking to align themselves with the next leading Indian hospital or health care benefit innovation.
The use of health insurance in India is also spreading, making for more trips to the doctor for Indian citizens.
Everstone’s private equity business is focused in India and Southeast Asia. The firm has over $2 billion in private equity funds invested. The investment business is focusing on consumer-targeted areas with a focus on healthcare, retail, financial services, education, and business services. Prominent investments have included deals with Servion, OmniActive, Modern, and Hinduja Leyland Finance.
The Carlyle Group
The Carlyle Group has approximately $84 billion in total private equity investments, as of 2020. Carlyle representatives publicly stated that investment in India is a catalyst for job creation and has exponential implications for wealth creation within the nation.
The firm’s investments in India are generally combined with prospects in Southeast Asia. In 2018, it reported fundraising of $6.55 billion for a fund investing in Asia including growth and buyout deals in India. The India investment business has a newly appointed managing director, Vikram Nirula. Top investment deals include SBI Cards, PNB Housing Finance, Metropolis Healthcare, and Delhivery Logistics.