Private Equity is Turning to India as a New Source of Alpha

An India-focused private equity fund is coming to the markets.

PE s Warburg Pincus announced plans to raise $1.5 billion for its first fund centered around India. Reuters also reported that the company is bullish about opportunities in the country.

The new fund will target the country’s consumer, financial, and manufacturing sectors. Moreover, the report indicates that it wants to raise $1.5 billion by the end of Q2 2020.

The company did not respond to Reuter’s requests for comment.

The new fund comes at a time that rival KKR is seeking to raise $15 billion for an Asia-focused fund. Warburg has an office in Mumbai already. The firm currently owns stakes in insurance firm IndiaFirst, real estate firm Virgo Retail Ventures, and Avanse Financial Services, an education platform.

India-focused Private Equity Fund

Meanwhile, India isn’t a very popular destination for private equity firms. Furthermore, larger buyout companies like Blackstone Group traditionally invest in India through regional funds.

That said, India has emerged as a popular destination as firms aim to sell equity to increase their reach. Reuters said that family-owned companies are also unloading their controlling stakes to reduce debt.

Finally, investors view India as a popular destination due to its increasingly business-friendly regulations. Firms cite low valuations, an expanding middle class, and new banking laws as other reasons to invest there.