Exploring India's New Capital Stack

Beyond venture capital, India is seeing private equity, venture debt and family offices gearing to redefine private markets.

- BY PRINCE KARIAPPA

India’s investment ecosystem is going through a significant transformation as private equity (PE), venture debt, and family offices are increasingly asserting their influence across the financial spectrum. While venture capital has long dominated funding narratives, a more diversified and nuanced capital stack seems to be emerging, bringing with it new players. PE firms are now doubling down on control deals and late-stage growth, while venture debt is offering a non-dilutive option to startups navigating turbulent markets. On the other hand, family offices are evolving from passive investors to shaping sectoral bets.

According to an EY report, PE investments in India rebounded with a 5 per cent year-on-year growth, aggregating to USD 56 billion, up from USD 53.4 billion in 2023. This increase in deal value was driven by a 54 per cent rise in deal volume, with 1,352 deals in 2024 compared to 880 in 2023, primarily caused by private credit deals, whose volume increased by 256 per cent.

In March, Bain Capital, a global PE firm, announced a definitive agreement to acquire joint control in Manappuram Finance, a Kerala-based non-banking financial company (NBFC) in partnership with existing promoters who are poised to stay fully invested.

Manappuram Finance is poised to use this deal to upgrade operations, strengthen leadership, and expand presence across key segments, reiterating the growing influence of PE funds across key sectors in a growing economy like India.

The NBFC, founded in 1946, is the 2nd largest financier in the gold-loan segment in the country and has served over 6.59 million customers through a network of 5,357 branches.

“The collaboration leverages our deep expertise and commitment to sustainably expanding India’s financial services sector while democratizing access to financial products that foster entrepreneurship and wealth creation across the country,” said Pavninder Singh, Partner at Bain Capital.