Investcorp plans major ramp up of India assets to $5bn

Investcorp plans a major ramp up of investments in India, according to Mohammed Alardhi, executive chairman, as the alternative asset manager joins global firms eyeing opportunities in the world’s second most-populous country.

The Middle East firm expects to reach $5bn of assets in India in the next five years, up from just over $600m currently, or 1.5 per cent of the $42.7bn in assets managed by Investcorp, Alardhi told Bloomberg News in an interview in Mumbai.

The investor adds to firms including Ontario Teachers’ Pension Plan Board and Apollo Global Management that are seeking to extend footholds in India. Investcorp’s plans for the country include a new credit strategy, stronger emphasis on infrastructure deals and finding a target for its India-focused blank-check company, Investcorp India Acquisition Corp., which raised $259m in a US initial public offering in May, Alardhi said.

Rishi Kapoor, Investcorp’s co-chief executive officer, said the changes in the regulatory environment and digital transformation have made India “a more homogenous country, like the US,” to do business.

“India’s investment ecosystem is now mature,” Kapoor said.

Investcorp, which has among its shareholders Abu Dhabi sovereign fund Mubadala Investment Co., began its operations in India in 2019. The midmarket-focused firm has made investments in India across consumer, healthcare, wellness and financial services, with an overlay of technology, according to Kapoor.

The company is currently raising another India-focused fund, targeting $500m, which is more than double its predecessor which wrapped up with $142m in 2019, according to people familiar with the fundraising efforts. Given its India ambitions, Investcorp’s latest fund could be even larger than that, the people said, asking not to be identified discussing confidential information.

Investcorp declined to comment on the fundraise.

The asset manager has been expanding holdings from the US to Asia as it seeks to reach assets of about $100bn. The fund delisted from the Bahrain stock exchange last year after almost four decades in a move it said would give it the agility to expand faster. Mubadala acquired a 20 per cent stake in the firm in 2017.

Investcorp, which typically participates in the last or penultimate pre-initial public offering fundraises, is seeking bigger-ticket deals to keep pace with India’s startups, Kapoor said. More companies are raising larger pools of capital, and Investcorp’s sweet spot, which used to be about $50m for investments, is now between $75m to $100m, including co-investments, Kapoor said.

Investcorp will also focus on providing financing to the portfolio companies of private equity firms, Kapoor said, though declined to say when such a credit fund will launch.

For its SPAC, the firm is seeking acquisition targets with “a strong India angle,” Kapoor said. Some of its own portfolio companies, where it holds a minority stake, could also be potential targets, Kapoor said.