Mumbai: Bahrain-based alternative investment manager Investcorp aims to grow its business in India to $1.5 billion in assets under management over the next five years, said its executive chairman Mohammed Alardhi.
In January, Investcorp forayed into the Indian market through the acquisition of the private equity and real estate investment businesses of IDFC Alternatives. This formed part of the firm’s global expansion plans under which it plans to nearly double its global AUM to $50 billion by entering new geographies and new lines of business. Investcorp currently has $28 billion worth of assets under management.
“Our vision for the firm is that we want to be a respected global investment firm in the alternatives space. Any gaps we have in the alternative space, we want to fill them. So, we didn’t have an infrastructure business, we started an infrastructure business. We were not in India; we are now in India. We weren’t in China; we are now in China. In the US, we started there four decades ago and now we want to go deeper into that economy,” said Alardhi.
He said the company is interested in India “because it is one of the fastest-growing economies in the world, it’s the biggest young population there is in the world, hard-working people and entrepreneurial”.
We want to be a part of this growth. Like in any other economy, there are bottlenecks, there are weaknesses here and there, but we’re here for the long-term,” Alardhi said.
Mint reported in July that Investcorp had closed its maiden India-focused private equity fund at around $150 million. The fund is a top-up of IDFC Alternatives’ fourth PE fund, which managed to raise around $70 million before it was acquired by Investcorp. It is also managing the third PE fund raised by IDFC Alternatives. Since January, the PE fund has invested in four companies—spices maker Integrow, online fashion retailer Bewakoof.com, home rental startup Zolo Stays and New Delhi-based value apparel retail chain, Citykart Retail. Its other investments include InCred Financial Services and eye care hospital chain ASG Eye Hospitals. Through its investments in India, Investcorp aims to tap the country’s consumption growth story and its enablers.
“One of the themes in our investment thesis is the mass-consumption story, but for us it is a little broader than just the consumption of goods. It is also making them available in an affordable format and creating access to good quality goods and services. This includes healthcare, financial services, mass-market consumption, consumer-tech,” said Rishi Kapoor, co-chief executive of Investcorp.
The firm is also eyeing opportunities created by the liquidity crunch in the non-bank lending sector in the country following defaults at Infrastructure Leasing and Financial Services (IL&FS) group last year.
“If you look at what’s happening in India right now, there is a lack of credit availability. So, we have been providing credit within our real estate business. Now it’s a challenging space on one hand, but precisely because it is a challenging space, there is an opportunity around it. There is an opportunity to generate a good risk-adjusted return for a credible provider of capital within the affordable mid-market housing space,” said Kapoor.
In overseas markets, Investcorp’s strategy is largely focused on acquiring controlling stakes in firms. In India, however, it is currently scouting for minority growth capital investments.
“Our DNA is control deals but we recognize that in markets like India, China and the Middle East, which are all emerging markets, growth capital alongside the promoters and founders has a pivotal role to play,” Kapoor said. “As the market matures, it is inevitable that buyouts will become a greater proportion of the overall PE. Right now, if it is around 20%, it may become higher in India and we will also evolve with the market,” he said.