In a first-of-its-kind move, US-based Warburg Pincus may be in the process of launching an India-specific fund. Sources peg the size of the fund to be around $2-2.5 billion.

There is no clear timeline for the fund’s launch, but it is likely to target new-age businesses, especially consumer-focused start-ups.

An overall de-risking strategy

While Warburg has China-dedicated funds and Asia-centric real estate funds, its investments in India are currently routed through its global funds.

The move to set up an India-specific fund is said to be a part of its overall de-risking strategy to ensure that the country’s concentration at the global fund level doesn’t become significant. This fund form a part of its Asia funds. Warburg declined to comment on the development.

Its investments in India are estimated at $5.5 billion, while its total global asset under management is pegged at $65 billion. Some of the large private equity players such as KKR, Bain, Carlyle, Blackstone and Sequoia operate in the country through their India-dedicated funds.

More focus on Indian start-ups

Warburg in recent years has upped its focus on Indian start-ups which have attracted nearly 60 per cent of incremental investment flows since 2020. Some of its marque holdings in the new-age businesses include Ola, Good Glamm, MedPlus, BoAt, Parksons Packaging and Good Host Spaces.

Among these, the New York-based fund house is eyeing an initial public offering (IPO) of ₹1,100 crore in BoAt where it holds about 38 per cent stake. Recently, the IPO of Biba Fashions pegged at ₹1,500 crore had to be put on hold for regulatory reasons, while the fund house is set to go ahead with the IPO of Fusion Microfinance where it invested ₹500 crore in 2020.

Company profile

Warburg is among the early private equity majors to set foot in India. It has over 25 years of history in the country. Its key investments include Bharti Airtel, CAMS, IndiaFirst Life Insurance, IDFC First Bank, and SBI General Insurance. Some of its noteworthy exits in recent times are Bharti Telemedia and Gangavaram Ports.

Last year, it made partial exits in Kalyan Jewellers and CarTrade Tech through their IPOs, while it recently offloaded 45 per cent of its shares (3.6 per cent of its stake) held in PVR. Typically, private equity investors aspire for a 15 per cent return in dollar terms, though lately gains have been restricted at 5-7 per cent.

Warburg’s mega India bet in a nutshell
PE Major set to launch $2-2.5 billion fund
Fund to focus on new-age businesses in the start-up space.
Bharti Airtel, CAMS, IDFC First Bank and IndiaFirst Life Insurance among marquee investments.
Investments in BoAt, Biba Fashions & Fusion Microfinance are lined up for IPO