Local Edge, Global Capital

Iam often asked what should domestic general partners (GPs) do to attract global institutional limited partners (LPs).

- SUDHIR VARIYAR

As I look back, no simple cookie-cutter formula comes to mind. Every manager's context is different, so the approach to building an LP base will differ.

Global LP interactions in the past were primarily centred around the 'India macro story'. While there was a brief period of euphoria for Indian private equity (PE) during 2005-07, where just turning up could get you an allocation. However, for most of the middle of last decade (~2015) Indian GPs were a sideshow in Asia, often speaking to empty rooms at conferences.

The India Story

However, things have changed post-2020. India now has the size and stability of the economy, the robust and diverse private corporate sector, the dynamic start-up ecosystem and the track record of exits by various domestic and global PE investors making it well-understood. For global institutional LPs, arguably, India is the most important market in Asia.

It is evident that barring any significant upheaval, the industry will attract substantial capital inflows. Even amid global uncertainties and market fluctuations, India's private equity and venture capital landscape continued to demonstrate resilience in 2024, drawing in $56bn in investments, a modest but meaningful 5% uptick over the previous year.

Alongside, the GP industry has also grown and matured. Global LPs have different options to get India exposure. The choice is between the large global funds, the regional and pan-Asian funds, and the domestic managers; the choice is between stage—venture capital and PE; the choice is between a fund doing a specific sector or a more generalist fund. And, of course, the perennial question is whether to do PE at all or get India exposure through investing in mid-cap public markets.