Private equity's next leap hinges on local fund needs and buyouts

India’s private equity industry is evolving, with local funds securing substantial capital and achieving consistent returns.

During a panel discussion at TiEcon Mumbai 2025, industry leaders emphasised growing opportunities in scaling buyouts and expanding domestic investor participation.

Renuka Ramnath, founder, MD, and CEO of Multiples Alternate Asset Management, stated that domestic capital has become a crucial source of funding for Indian private equity with about $120 billion deployed in the Securities and Exchange Board of India (Sebi)-registered Cat I and Cat II funds.

“This includes the entire spectrum of private equity, infrastructure, and real estate, which is a massive number.

"Every year, we are growing at about 30 per cent from the previous year in terms of the total amount of capital we are able to attract into this sector,” she said.

As more individuals accumulate wealth and wealth management proliferates, they can afford to save and multiply their capital rather than rely on interest income to run their households, Ramnath said.

"I would still like to believe that, at this point, allocation, even for very rich individuals, will be in the 1-2 per cent range and it has a potential to go up to 15 per cent, at least for extremely wealthy individuals," she said.

Despite this progress, institutional investors such as the Life Insurance Corporation of India (LIC) have yet to play a major role, limiting the depth of local capital, she said.

“I would say there has been a de-growth from one of the largest pocketed investors in India,” Ramnath said, adding that Indian family offices and ultra high net worth individuals (HNIs) are emerging as important suppliers of domestic capital.

Manish Kejriwal, founder and managing partner at Kedaara Capital, said that due to strong demand from foreign investors, the firm did not include domestic capital in its third and fourth funds.

He noted that for the next fund, they plan to allocate at least 15 to 20 per cent to domestic investors.

He also highlighted the growing role of buyouts in the Indian market, driven by second- and third-generation business owners looking to exit.

Buyout transactions have gained momentum as private equity firms transition from passive minority investments to active control and governance roles.

Cyril Shroff, managing partner at Cyril Amarchand Mangaldas, pointed to regulatory changes that have made private equity a more mainstream asset class in India.

He noted that liberalisation in sectors like insurance has facilitated foreign investment and emphasised the need for further reforms.

“A bunch of things need to be done, but the biggest one is almost like a regulatory holy grail, delisting or taking private.

"The day that happens, you will see a floodgate as well.

"We have over 6,000 listed companies, and more than half of them don't deserve to be listed, at scale, at least.

"So how are you going to find a way to effectively take them private?

"The day that happens, private equity will probably swoop in to take up that opportunity as well,” he said.