Deal focus: Investcorp takes the plunge into India

In 2015, Investcorp was facing the latecomer’s dilemma. The Bahrain-based asset manager wanted to expand its investment horizons beyond private equity and real estate in the US and Europe, and Asia’s booming private markets, particularly China and India, carried a natural appeal. But the firm had few local resources or contacts to help it compete with industry peers that were already there.

“Trying to invest in India remotely is a pretty naïve idea. You have to have bodies on the ground and be connected to the local ecosystem at all levels, whether it’s the entrepreneurs you’re looking to invest in, the network of intermediaries for sourcing and deal flow, or stakeholders that can be a rich source of information,” says Rishi Kapoor, co-CEO of Investcorp.  

The firm made its entry into China last year, testing the waters with a commitment to a fund managed by China Everbright. For its first move in India, where it saw considerable opportunities emerging in the consumer and credit spaces due to the local banks’ ongoing lending difficulties, Investcorp was eager to hit the ground running on its own. The question was, how could it build a team and acquire vital market knowledge quickly while avoiding the pitfalls of a new arrival?

The answer came in the acquisition of the private equity and real estate businesses of IDFC Alternatives, which is currently divesting assets as part of the restructuring of its parent IDFC Group. Buying these businesses has given the firm instant access to two existing funds in each asset class, with total assets under management (AUM) of nearly $450 million. 

More importantly, IDFC’s 20 investment professionals were added to the Investcorp payroll, bringing in substantial Indian investment expertise.

“Coincidentally, the businesses were focused on precisely those areas that we had identified as priority sectors: private equity investments in the broad consumer space and structured credit in real estate lending,” Kapoor says. “And as we got to know the team better, we realized it was a very solid, experienced group that had worked together as a cohesive team for quite some time and seen a number of cycles.” 

Since the former IDFC teams are largely aligned with Investcorp’s previously determined strategy, the new owner expects them to need little guidance or interference from above. 

However, the firm does feel that it has much to offer the new crew as they build on their 15 years of success in PE and real estate. The plan is to grow AUM to $1.5 billion over the next 10 years. 

“We can provide the benefit of all our in-house knowledge and experience in private equity and real estate, to the benefit of the team in India, while facilitating ongoing fundraising for their products through our global franchise,” says Kapoor. “Those are the levers we feel will propel the India business to greater heights going forward.”   

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• South Asia
• Buyouts
• Growth
• Credit/Special Situations
• India
• M&A
• Investcorp