BFSI Summit 2026: PEs shift strategy from 'spray and pray' to focused bets

At the BFSI Insight Summit 2026, PE leaders Renuka Ramnath and Amit Chandra stressed selective investments, active ownership, AI-led value creation and the need for domestic capital

India’s private equity (PE) industry is moving towards a more selective investment model, as fund managers increasingly concentrate capital in established businesses, seek greater influence over strategic decisions and focus on operational transformation to generate returns.

 

This marks a shift from the broad-based investment approach, described as ‘spray and pray’, particularly in venture capital (VC), where investors spread capital across multiple firms in the hope that a few winners will compensate for losses elsewhere.

 

“Spray and pray is a terminology that most people casually use for VC,” said Renuka Ramnath, founder and chief executive of Multiples Private Equity. “As a PE firm, we invest for very definitive returns that we want to generate. The methodology to generate the return is well articulated at the time of deal making.”

 

 

Speaking at the Business Standard BFSI Insight Summit 2026 in Mumbai on Tuesday, Ramnath and Amit Chandra, partner at Bain Capital and chair of India, outlined how investment strategies have evolved alongside India's economic growth.

 

India's PE and VC investment activity has expanded considerably over the last 15 years, although annual deployment has fluctuated sharply. Investment volumes rose from around $38-40 billion in 2020 to approximately $70-77 billion in 2021, but fell below $40 billion in 2025. Chandra argued that the long-term trend matters more than annual spikes. Before 2010, India's PE industry generally deployed $20-30 billion annually. That grew to roughly $30-60 billion over the next 15 years.

 

However, this needs to be viewed against the country's economic growth. A rise in PE deployment does not necessarily represent an equally dramatic increase in the industry’s penetration of the economy.

More important, according to Chandra, has been the improvement in the consistency of returns generated by established investment managers.

 

“Returns now seem to be more predictable for the well-established players,” he said, pointing to the performance of leading domestic and global firms. India's median and top-quartile PE returns have generally compared favourably with the Nifty, including when measured in dollar terms, he added.

This has helped investors to become more discerning about where they deploy capital.

 

The investment thesis must begin before the deal

 

When Ramnath founded Multiples in 2009, India was emerging from a period of relatively weak economic growth.  “We decided that we will look at company-specific stories, and decide whether we want to be invested in the company, and how to generate the required returns,” she said.

 

That approach evolved as the macroeconomic picture became clearer. When Multiples raised its third fund after 2014, policy initiatives and emerging investment opportunities offered greater visibility into specific sectors.

 

Ramnath cited the government's affordable housing push, including the Pradhan Mantri Awas Yojana, as an example of how a clearly defined economic opportunity could support a sectoral investment thesis. Multiples backed Vastu Housing Finance, building an investment around the potential for growth in housing finance.

 

But a promising sector does not automatically make the investment successful. For PE managers, the discipline lies in linking the macro opportunity to a company-specific plan for delivering returns.

 

Active ownership is central to value creation

 

Both speakers stressed that PE firms must work with portfolio firms to bring about meaningful changes in strategy, scale and management. Ramnath described investors as partners to entrepreneurs, with capital serving as the entry point to a longer relationship.

 

“If we are not able to change the mindset of the entrepreneur to think way bigger, more scale, more institutionalisation and more possibilities, then we have been an inert, passive partner, which we are not,” she said.

 

“Our most important job is to deliver returns above the stock market,” Chandra said, adding that Bain seeks to generate returns around 400-500 basis points (bps) above the Nifty.

 

The strategy also recognises the asymmetry inherent in PE returns. An investment can lose a substantial portion, potentially all, of the capital deployed, but successful investments can multiply the original investment several times over.

 

So, the objective is to combine a strong investment selection with sufficient winners to offset failures. 

 

AI creates opportunities as well as risks

 

Artificial intelligence (AI) is adding another layer to investment decisions. Rather than treating AI purely as a new investment opportunity, the panelists emphasised the importance of assessing how it could reshape existing businesses.

 

Ramnath pointed to Multiples' investment in AI services company Quantify in 2018. The application of relatively simple technologies, including cameras and scanners, demonstrated how companies could improve productivity and efficiency. She noted that AI-driven productivity improvements at Quantify had also affected operating margins, illustrating how technological change can alter business economics.

 

For investors, the task is to identify firms capable of using AI to create value while understanding how the technology could disrupt existing revenue streams and competitive advantages.

 

Chandra said every investment now requires an AI audit assessing whether a firm stands to benefit from or risks being disadvantaged by technology.

 

He expects firms such as Bain Capital to focus more on AI-related infrastructure, including semiconductors, data centres and computing capacity, rather than compete with VC investors for bets on large language models (LLMs).

 

This reflects the broader investment philosophy: identify opportunities aligned with a fund's capabilities and investment horizon, while systematically evaluating downside risks.

 

Domestic capital is critical to the next phase

 

Even as India attracts international investors, the industry needs a deeper domestic pool of long-term capital to sustain its expansion. Chandra argued that India cannot depend indefinitely on foreign capital to finance private businesses. “Every dollar that comes in will eventually be two to three dollars when it goes out if it's reasonably invested,” he said, explaining that rising gross inflows do not necessarily translate into equally strong net inflows over time.

 

A more vibrant domestic PE industry would allow Indian investors to diversify into alternative assets while providing firms with a more durable source of growth capital.

 

Chandra called for a policy framework that encourages domestic institutions, including pension funds, insurance companies and endowments, to allocate more resources to PE.

 

While investment choices would not fundamentally change depending on whether a fund manages Indian or foreign money, funds raising capital internationally must account for dollar-denominated return expectations, making rupee depreciation an additional consideration, Ramnath said.

 

Quality assets still have an exit market

 

The more selective investment environment is also visible in exits.

Chandra described the market as a “tale of two cities” with segments, such as IT services and VC-backed firms, facing more difficult exit conditions, contributing to the decline in overall exit volumes.

 

Quality assets, however, continue to attract strong interest.