GA to double down  on  India funding over next 10 years

“Between 2022 and 2032, we will mostly invest more than double the amount we invested in the last decade,” Sandeep Naik, managing director and head of India and Southeast Asia for the firm, said in an interview.

Investments over the next decade will be focused on companies in sectors such as consumer, financial services, healthcare, life sciences, technology and climate, Naik said.

So far, General Atlantic has primarily built its growth investments in India, but it aims to increase the pace of its buyout deals and focus more on mid-market IT services firms, the executives said.

“We are globally adding buyout as a capability to GA. And that’s the direction in which we will look at. But I would say that most of the deals that GA does will be minority, and buyouts are just another toolkit and a skill set we have added. But if you think about India, growth is where the opportunity is. So, could we do buyouts? Yes,” Naik said.

It also expects to make significant investments in the mid-market IT services space, which it feels it may have missed out on over the past decade because of its focus on value-added services.

“I would add two areas in which we should have done more mid-market buyouts—first is IT services. And that’s an area where many of our peers have invested significantly. The second area we see more opportunities is software coming out of India,” Shantanu Rastogi, managing director and head of India at the firm, said.

According to Rastogi, there are buyout opportunities in tech and tech-enabled businesses—particularly those with double-digit organic growth, sticky revenues and high gross margins.

In 1998, India was the first emerging market that GA invested in. For the first 10 years that the firm set up shop in India, i.e., between 2001 and 2011, it invested roughly around $960 million in deals such as Mu Sigma, Fourcee Infra and Asian Genco. Between 2012 and 2022, it invested a total of $3.3 billion in companies such as Jio, Reliance Retail, Unacademy, ASG Hospitals, NoBroker, Billdesk and Byju’s.

Though the firm does not disclose how much capital it has returned or the internal rate of return on the investments, it has so far seen exits from some of its earlier investments, such as Citius Tech, DMart, IndusInd Bank and the National Stock Exchange.

So far this year, it has sold part of its stake in IIFL Wealth and its entire holding in Mu Sigma back to the founder. The firm is now in the process of listing KFin Technologies. It also nearly sold its holding in payments processing firm Billdesk to Prosus-backed PayU in a record $4.7 billion transaction. But the transaction collapsed after Prosus walked away from the deal as closing conditions were not met as on 30 September.

In the coming decade, the firm will work on its strategy in the region and step up its platform and buyout investments.

“While our priority in India is a continued focus on growth investing, we see buyout opportunities in tech and tech-enabled businesses—particularly those with double-digit organic growth, sticky revenues and high gross margins,” Rastogi said.

In an interview in January, Naik said that General Atlantic was looking at making significant in Indian SaaS companies.

Towards this end, it made an investment earlier this month in media SaaS unicorn Amagi Media.

The PE firm, which has unicorns such as Byju’s, Uncademy, and NoBroker in its portfolio, expects to continue backing tech-enabled companies.

“Our investment themes are underpinned by long-term secular trends, including the transition to a digital economy, which has driven growth in areas like edtech, digital health, and fintech, “ Naik said. “Even as the world normalizes post-covid, we anticipate that this transition will continue to enable the formation and growth of innovative companies that are creating new markets and disrupting existing ones,” he added.

The firm, which completes two decades in India this month, has been among the earliest backers of companies in the region with private capital. Around 11% of the firm’s total global portfolio by value is in India and Southeast Asia, said Naik. According to the firm’s website, it currently has over $73 billion in assets under management.

“We deploy an average of $8-9 billion in capital annually, with approximately 60% of this invested outside the US and two-thirds in emerging markets. We anticipate that deployment in India over the next decade will be in line with our investment growth given the quality of entrepreneurship and innovation we see,” Naik said.