Appeal of India's private markets rising among asset owners

Institutional investors can choose a variety of alternative investments in the world’s most populous country, according to Preqin's latest report.
Appeal of India's private markets rising among asset owners

Various private assets in India are showing potential for asset owners, according to alternatives data provider Preqin’s Alternatives in APAC 2024 report.

Angela Lai

“We see India rank very high among emerging markets from our investor surveys, and this is across asset classes so as a market it seems like investors are considering India attractive whether it is infrastructure, VC, private equity or private debt,” Angela Lai, head of Asia Pacific and valuation at Preqin research insights, told AsianInvestor.

Private capital has grown remarkably in the Indian market, doubling in the last five years to outpace other Asian countries.

Following the national election results earlier in June, asset owners now have an outlook for the coming five-year period.

Also read: Outlook for India equities after shock election results

Private debt in India has the largest single-country AUM in Asia Pacific region according to Preqin. The asset class has been growing ever since India started to improve the insolvency resolution process with the insolvency and bankruptcy code introduced in 2016.

“[The code] has since increased the fairness and transparency for creditors in a default scenario. This was positive for the India private debt market especially as it is mainly driven by special situations and distressed strategies,” Lai said.


Additionally, infrastructure took centre stage in India for the first time in 2023, as large deals in the energy and telecom sectors boosted infrastructure deal value to $14.1 billion, the report showed.

India continues to be the most active emerging market in Asia Pacific for infrastructure driven by energy-related projects due to the high demands of its growing economy and population, Lai explained.

“Similarly, the long-term fundamentals is supportive for VC and opportunities are spread across a wide spectrum of sectors,” she added.

Also read: Insurers identify key factors to watch while investing in India in H2

The report mentions that the India market’s deal focus shifted last year to infrastructure and private equity infrastructure from venture capital (VC). The slowdown in India VC activity reflects the overall weaker sentiment towards VC sentiment generally across the world.

“At the same time, the buoyant public equity markets, having seen healthy IPO activity and generally very positive performance in the past year, is positive for private equity especially those larger and more mature investments relative to the rest of the world,” Lai said.


Overall, the report shows that India holds potential across private market strategies.

Beyond universally thorough due diligence, Lai pointed to India’s emerging market status as a factor to be mindful of for asset owners contemplating tapping into the country's long-term growth potential.

“Investors should be aware of risks typically associated with emerging markets such as transparency, governance and execution risks, and currency,” Lai sad.

Likewise, the preferences on which Indian alternatives assets to invest to gain exposure ultimately depends on the investment objective and risk appetite of the investor, she pointed out.

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