India-Based LPs investing in Private Equity – January 2014

by Valerie Lee

  • 10 Jan 2014
  • PE

Preqin’s Investor Intelligence currently tracks a total of 532 Asia-based investors, of which 56 are based in India. These India-based LPs collectively have over $3tn in funds under management. It is not surprising that out of these 56 LPs, 45% of the corpus is seeking to invest solely in the South Asia region. Despite a strong regional preference, 21% of the group is open to allocating capital to vehicles targeting the wider Asia region, Europe, North America, other emerging markets and the global market, while the remainder take a more opportunistic outlook on fund focus.

The two largest investor types in India are banks (27%) and wealth managers (18%). The remaining 55% is split among other investor types such as insurance companies, family offices, corporate investors, investment banks, investment companies, asset managers, government agencies and private equity firms. Interestingly, India-based insurance companies, which make up only 14% of the corpus, hold the largest amount of funds under management of this group, with over $2tn. India-based banks, the largest investor type, account for the next highest proportion of funds under management worth over $0.8tn.

When looking at the types of funds that India-based investors look to commit to, 71% have either invested in, or expressed interest for, investing in venture capital vehicles. Growth funds are the next most favoured strategy, with 43% of the pool seeking investments in this fund type.

When it comes to investing with first-time fund managers, India-based LPs takes a rather liberal approach. Fifty-four percent are willing to invest with first-time fund managers while only 38% will not consider investing with such GPs. The remaining 8% may consider opportunities offered by  first-time fund managers on an opportunistic basis.

Given the precarious balance of India’s private equity environment and the slowdown in its economy at large, India-based investors will need to play an important part in re-invigorating the South Asia private equity landscape and are likely to be a vital source of capital for fund managers in in the region during 2014.

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