‘India IPO boom narrows private equity returns gap with China’

“Our long-term returns from India have been largely on par with those of China. However, distributions have been a bit slower, largely because exit markets took time to open up,” Peter Lui, principal at LGT Capital Partners, said in an interview with Mint. “In the last couple of years, the Indian IPO market has become a meaningful exit avenue, and so the pace of distributions has improved.”

TheSwitzerland-based firmhas ramped up its India exposure across both its APAC-focused and global funds. The firm has deployed about $1.7 billion in the country over the past two decades—over $500 million of which came in just the last 18 months. “We expect a similar trajectory over the next 18 to 24 months,” Lui added.

“Given the current geopolitical situation across the world, India is being viewed by investors as a safer bet. This, combined with the strong domestic demand and rising manufacturing investment, has led to greater capital inflows from global investors,” said Natasha Treasurywala, partner at Desai & Diwanji. IPOs have been a significant driver of exits in India with a steady surge of successful offerings in the past two years, Treasurywala added.

LGT Capital has backed about nine Indian managers, including Kedaara Capital, ChrysCapital, and VC firms like Nexus Ventures and Peak XV.

It has raised five APAC funds so far and is in the process of raising a sixth fund. The fund is targeting $1.2 billion and has raised about $800 million to date, according to a report by Private Equity International. It is currently deploying from its fifth fund, which it plans to close by year-end.

From its APAC strategy, LGT typically allocates 20–25% to India, but is increasingly tapping its global funds for larger transactions. “For large transactions like the National Stock Exchange or Multiples’ continuation vehicle, we can bring in capital from multiple pools, in addition to our flagship Asia fund, which is how we’re able to write sizable cheques,” said Lui.

The firm’s total assets under management are over $100 billion, and it has exposure to private markets, multi-alternatives, diversification, and other sustainable strategies.

Booming secondary market

LGT has also emerged as one of the most active global investors in India’s booming secondary market, backing large deals such as Multiples’ $430-million continuation vehicle earlier this year and ChrysCapital’s $700-million continuation vehicle in 2024.

This shift comes asglobal limited partnersare cutting exposure to managers who deliver strong paper gains but lag on actual distributions.

“We have a strong preference for partnering with managers who have demonstrated long-term outperformance and distributions through cycles, like ChrysCapital, who have demonstrated they can exit companies and distribute liquidity. Otherwise, we are more sceptical of paper returns,” Lui said.

To be sure, distributions to LPs have accelerated as India’s IPO markets opened up. ChrysCapital, for example, has returned $7 billion across 80 exits and fully exited its first six funds.The firm is now in the process of raising capital for its tenth private equity fund.

In India, LGT’s deployment is balanced across fund commitments, secondaries, and direct investments. In contrast, China—which once made up 40–45% of its regional activity—has dropped to 20–25%.

“The cycle has slowed lately and fund activity has dropped as many GPs haven’t raised successor funds, reflecting the macro environment,” said Lui, noting that LGT now invests in China largely through secondaries.

Lui added that while India has gone through multiple cycles over the past decade, the latest IPO wave appears more resilient. “This time feels different. Earlier, IPO markets were reliant on foreign capital—once that pulled out, markets dropped. Now, domestic flows are supporting the market. That reduces volatility and demonstrates depth and consistency, which is positive for creating a long-term, sustainable exit market,” he said.