India is a growing emerging market nation with untapped resources and a sizable labor force. Reflecting its potential, 2019 was a record year for both private equity and venture capital. The average size of investments grew substantially while the top sectors were banking, insurance and finance, and consumer technology. Real estate and infrastructure telecom and IT were also sectors showing significant private equity growth.

Key Takeaways:

  • India has attracted billions of dollars to various industries, such as healthcare and technology.
  • The Carlyle Group had invested over $2.5 billion in India as of March 31, 2020.
  • Warburg Pincus invested $50 million in 2019 in Perfios Software Solutions in conjunction with Bessemer Venture Partners.
  • Warburg Pincus also recently invested $95 million in a technology-driven affordable housing finance company in conjunction with Orange Clove Investments BV.

Understanding India and Private Equity Investment

Private equity is money raised to fund a company through private sources rather than by issuing shares through an initial public offering (IPO), which is called public equity.

The year 2019 was a record year for private equity in India. Private equity and venture capital investments rose to their highest level in the last decade at $45.1 billion, according to the India Private Equity Report 2020 from Bain & Company.

The most popular sectors for investment are banking, financial services and insurance (BFSI), and consumer technology, but the investment is also high for real estate and infrastructure, telecom, and IT and information technology-enabled services (ITES). India also saw a decreasing number of exits throughout the year due to fewer exit opportunities and a weak macroeconomic environment.

The COVID-19 epidemic is expected to cause a short-term dip in investment activity, as is the case globally. However, this could present opportunities for investors, according to Bain & Company, particularly in Software-as-a-Service (Saas) and cross-sector technologies.

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 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.

As of December 2020, India had approximately 125 private equity firms specializing in a range of sectors and investments. Private equity companies are located in tier-1 cities only. In India, Mumbai is a major hub. Here are the five top private equity firms in India, according to The WallStreet School, India.

Top 5 Private Equity Firms in India

1. The Carlyle Group

The Carlyle Group was founded in 1987 and is one of the world’s largest private equity companies. The group has invested over $200 billion globally with a focus on the consumer, healthcare, and manufacturing sectors. The group does not invest heavily in real estate.

In May 2020, The Carlyle Group acquired close to a 75% stake in SeQuent Scientific Limited, the largest animal healthcare company in India. The Carlyle Group has a well-established history of investing in the healthcare sector. It has invested in Medanta Medicity Hospital in the National Capital Region of Delhi, and Metropolis Healthcare, which operates a chain of diagnostic centers and laboratories. Carlyle had invested more than $2.5 billion in India as of March 31, 2020. Other notable investments include SBI Life, SBI Card, HDFC, India Infoline, Delhivery, and PNB Housing Finance.

2. Warburg Pincus

Founded in 1966, Warburg Pincus is a New York-based private equity firm with over $60 billion in assets under management. The company invests in SaaS, data and information, and fintech sectors globally with investments in Ant Financial, Varo Money, FIS, Interactive Data Corporation (IDC), Avalara, iParadigms, Sagent (formerly Fiserv Lending), Reorg Research, and Trax.

In November 2019, Warburg Pincus and Bessemer Venture Partners invested in Perfios Software Solutions, a leading fintech software player, to the tune of approximately $50 million. In October 2020, the company, along with its affiliate Orange Clove Investments BV, invested $95 million in Home First Finance Company India Ltd, a technology-driven, affordable housing finance company that provides home loans to low- and middle-income customers who are building or buying their first homes.

3. Bain Capital

Bain Capital was founded in 1984 and is headquartered in Boston, Mass. It is a leading private multi-asset investment firm that invests in all sectors. In 2019, according to Mint, Amit Chandra, managing director and chairman of Bain Capital India, announced that Bain Capital would invest $1 billion in Indian companies over the following three years. Bain Capital has invested $2.5 billion in India since 2012. The company has invested in Axis Bank, Genpact, Hero MotoCorp Ltd, Emcure Pharmaceuticals Ltd, Larsen and Toubro Ltd (L&T)’s financial services arm L&T Finance Holdings Ltd, and engineering services provider QuEST Global Services.

4. TPG Growth Capital

TPG Growth Capital was founded in 1992. The firm has over $70 billion of assets under management and has invested almost $2 billion in India. TPG growth’s main focus area is distressed assets.

According to Forbes, TPG’s first-ever deal was buying out the then-bankrupt Continental Airlines in 1993. In May 2018, TPG and Shriram Group sold Vishal Mega Mart (formerly Vishal Retail) for an undisclosed sum, and TPG experienced one of its biggest years of investments in India in 2018. TPG in India deploys capital across categories: TPG Capital manages transactions and buyouts; TPG Growth manages the middle market and growth equity investment platform, TPG Rise is a social impact platform, and Asia Healthcare Holdings is TPGs healthcare platform. TPG is focused on health care, consumer, financial services and technology, and media and telecommunications sectors for investments.

5. CVC Capital Partners

Founded in 1981, CVC Capital Partners has total assets under management of around $75 billion. CVC's first investment in India was as recent as 2018. The group acquired enterprise legal services firm UnitedLex BPO Private Limited.

In Asia overall, the firm is focused on core consumer and services sectors. As of April 2020, according to VCCircle, CVC had has raised $15 billion of commitments across its Asia Pacific funds for 65 investments in varied industries.