Increasing concentration of capital among established managers in India’s private equity market is not necessarily a negative development but a sign of a broader shift towards valuing consistency and repeatability of returns, opined panellists at DealStreetAsia’s inaugural Asia Private Equity Leadership Summit in Hong Kong on May 20.
The country’s private market is moving beyond a purely growth-led narrative, underpinned by rising participation from global and domestic investors, a broader set of mid-market opportunities and a widening range of investment structures. As capital deployment continues, greater emphasis is being placed on exits and realisations.
Michael Liu, Managing Director (Asian Investment team) at Future Standard, acknowledged the increasing dispersion of outcomes across managers in the country, but argued that this is a normal feature of the market cycle. “We need more established managers to continue delivering consistent track records, which can then help to broaden interest over time and, alongside an improvement in sentiment towards Asia, bring institutional capital back into India in a more meaningful way,” said Liu at a panel discussion titled ‘India private equity is no longer just a growth story‘ at the Summit.
He also pointed to the need for more consistent outcomes in the middle section of the market, citing mid-market returns of around a 20% gross IRR and a 2.5x gross multiple, rather than a pattern characterised by a small number of strong outliers and limited breadth beyond them.
Broader and more consistent mid-market performance, he suggested, would help build investor confidence and support higher capital allocation to India.
The Indian mid-market is a broad and increasingly bespoke space, particularly when compared with the larger end of the market. At scale, both on the capital provider side and across the wider ecosystem, deal flow tends to be more standardised, with a defined group of larger players focused on a similar set of intermediated and well-banked opportunities.
“In the mid-market, however, there is significantly more scope to differentiate. There are multiple strategies available and, as India has matured, different managers have increasingly identified distinct segments of the market they want to focus on,” said Abhishek Sharman, Founder and Managing Director, Carpediem Capital, speaking at the same panel.
“In the mid-market, there is significantly more scope to differentiate.”
One of the key developments, in Sharman’s view, is that value creation in mid-market companies has become a far more structured and disciplined process. Many firms now operate with well-defined frameworks for sourcing, sector selection, and post-investment interventions, including talent strategy within portfolio companies and capital structure optimisation, among others.
As a result, the mid-market today offers a broader spectrum of opportunities than in the past, alongside greater scope for firms to differentiate themselves, both in terms of the segments they focus on and the strategies they pursue.
Gaurav Ahuja, Senior Partner at ChrysCapital, pointed to signs of maturation in the market, reflected in an increase in control opportunities within private equity. This, he said, partly stems from businesses established after India’s liberalisation in the 1990s now reaching a stage where founders are approaching retirement or facing succession challenges, prompting considerations around transfer of control. He also highlighted that many companies, which have scaled from bootstrapped origins, now require fresh management capability to drive the next phase of growth, particularly in scaling operations.
“As a result, many entrepreneurs are looking towards firms like ours to step in, take control, build out management teams, and support operational improvement,” said Ahuja.
While this shift signals market maturation, he cautioned against an overly buyout-heavy ecosystem.
“India will, therefore, remain a market characterised by a mix of minority and buyout investments. We would like to see more entrepreneurs setting up businesses, securing funding from mid-market investors, and then, once these businesses reach a certain stage, firms like ours stepping in to replace existing financial sponsors on the cap table,” added Ahuja.
“India will remain a market characterised by a mix of minority and buyout investments.”
Broader participation across the GP ecosystem is also emerging as a key theme for the next phase of growth.
Nilesh Shrivastava, Partner, Strategic Opportunities Fund at the National Investment and Infrastructure Fund (NIIF), said during the panel discussion that the firm’s fund-of-funds strategy was built on the premise that beyond a handful of established names, India has a deep bench of managers, with close to 400 operating across segments.
“That approach,” he said, “initially focused on venture, growth and sector strategies, with an emphasis on operational standards and track record, and has since expanded into co-investments and deeper manager assessment.” Beyond capital allocation, he described NIIF’s role as increasingly that of a sounding board for global investors seeking to understand the broader manager landscape.
Shrivastava pointed to a gradual deepening of domestic capital participation, including rising engagement from state-backed vehicles, insurance pools and early-stage pension capital. While still at an early stage, he suggested that greater participation from pension capital in particular could materially expand the base of institutional managers and reshape the depth of the GP ecosystem over time.
“Domestic capital in India is very deep, very strategic, and very patient. We have seen a number of family offices willing to deploy significant amounts of capital, and they tend to engage very actively with founders in high-conviction deals. They think about these investments in a very strategic way, and, of course, they are not bound by fund timelines in the same way that we are, which allows them to take a longer-term view,” said Tarun Sharma, Senior fund manager & Strategy head, Healthcare and Consumer, 360 ONE Asset.
At the same time, the debate over capital availability remains nuanced.
Sharman and Ahuja both believe that India still lacks deep institutional capital pools—particularly in the absence of large endowments and sovereign wealth funds—domestic participation is gradually expanding from a low base, even as global capital continues to dominate private market allocations.
Over time, as India matures across successive cycles, businesses are expected to transition through ownership changes, family offices will become more institutionalised, and capital allocation will shift from entrepreneurial deployment towards more formal investment structures. This gradual evolution is expected to deepen the domestic capital base and move the market towards greater self-sufficiency.
On exits, there was broad agreement among the panellists that India’s private markets are still evolving towards a more mature ecosystem. Greater diversification of exit routes, including M&A, IPOs and structured solutions, is expected to be critical, a point echoed by LPs throughout the summit.
Over time, the panellists believe, more consistent mid-market and buyout outcomes, alongside clearer holding periods of five to seven years, are likely to become increasingly important in supporting sustained capital formation.
The comparison with more developed markets such as Japan underscored the point: consistency of exits and the availability of multiple liquidity pathways remain central to building investor confidence. The development of a more balanced exit environment, participants suggested, will be a key determinant of how quickly India transitions from an emerging allocation to a more structurally mature private equity market.
