Unused funds sign of sector maturing, lot of room for growth: PE chiefs

India's private equity leaders at the Business Standard BFSI Insight Summit said that unutilised capital reflects a maturing sector, as deal quality, domestic funding, and exits gain strength

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India’s private equity (PE) story is still gathering steam, say top fund managers, who argue that unutilised capital is less a sign of caution and more a natural transition as the market matures.

 

At a discussion during the Business Standard BFSI Insight Summit 2025 in Mumbai, industry leaders including Hari Gopalakrishnan (EQT Partners), Gopal Jain (Gaja Capital), Abhishek Kabra (Samara Capital), and Manish Kejriwal (Kedaara Capital) shared insights on India’s evolving private equity ecosystem, its growing domestic capital base, and the shift towards larger, more sophisticated deals.

 

Private equity finds its stride

Private equity in India has been active for over 25 years, and its role in the country’s economic transformation is undeniable, said Gopalakrishnan, partner and India head at Swedish investment group EQT PF.

 

“India is the fastest-growing large economy in the world, and we expect it to remain a global driver for demand in private equity,” he said. “Despite decades of activity, the sector here is still underpenetrated, which leaves room for significant expansion.” 

 

PE moves from margins to the mainstream

Jain, managing director (MD) and chief executive officer (CEO) at Gaja Capital, agreed that the industry is on the verge of mainstream acceptance. “Private equity in India punches below its weight,” he noted. “But we now have the data and momentum to show that PE and venture capital are moving from niche to mainstream. Just as mutual funds and insurance became household names, alternatives are following suit.”

 

According to Jain, the next phase of growth will hinge on domestic capital pools connecting India’s deep savings ecosystem with private equity and venture capital. “Every large economy eventually funds itself domestically. India is reaching that stage,” he said.

 

Market-beating returns

Kabra, partner at Samara Capital, highlighted that private equity has consistently outperformed public markets globally, and India’s story mirrors that trend.

 

“Globally, PE has outperformed public markets by about 6–7 per cent on a 10-year rolling basis,” he said. “In India, deal flow has picked up sharply. Ultra-high-net-worth individuals and family offices are increasing allocations to alternative funds — from 7–8 per cent now to a projected 15–16 per cent.”

 

He identified three pillars driving mainstreaming: fundraising, deal flow, and exits. “We now have vibrant opportunities in growth capital, buyouts, and even secondary exits. IPOs, domestic M&As, SME listings — all of these complete a healthy investment cycle,” Kabra added.

 

Exits and buyouts mark a new phase

Kedaara Capital’s founder and managing partner Kejriwal said India’s “sweet spot” stems from improved exit markets and a cultural shift among family-owned businesses. “Fifteen years ago, India was good at attracting capital but not returning it,” he said. “That’s changed. We’ve had robust IPOs, sponsor-to-sponsor sales, and rising acceptance among business families to sell strategic stakes. Selling is no longer seen as a mark of shame,” he added.

 

Buyouts, once rare, now account for half of all private equity deals, noted Gopalakrishnan. “In 2013, buyouts made up just 20 per cent of the market. With succession planning more common and the economy larger, both the pool of opportunities and transaction sizes have risen.”

 

India’s scale advantage

As India becomes the world’s fifth-largest economy, global investors are paying closer attention. “Private equity works in large and sophisticated economies,” said Gaja Capital’s Jain. “Until recently, India was neither large nor sophisticated enough. That’s changed. We now have the scale, entrepreneurs, and IPO markets to support sustained private equity growth.”

 

Kejriwal added that while India remains an “entrepreneurial country of immense depth”, the PE industry is still at the level of a cottage industry. “We’ve barely scratched the surface. The best years are yet to come,” he predicted.

 

AI and the next investment wave

On whether artificial intelligence (AI) will reshape investment patterns, Kejriwal struck a cautious tone: “We’re not chasing the AI hype. For us, the focus is on how our portfolio companies adopt AI efficiently, rather than betting on untested products.”

 

“AI is a constant game of adapting. Our job is to future-proof the businesses we invest in,” said Gopalakrishnan.