Singapore-based private equity firm Everstone Capital is planning to raise $800 million to $1 billion in its next fund and deploy a couple of billion dollars along with co-invest partners over the next four to five years a senior official said.
The predominantly India-focused PE company, plans to do around 8-10 deals of roughly $100 million size each, Vice Chairman, Private Equity, Avnish Mehra told businessline.
“There’s more than enough opportunities,” Mehra added. Over the last six-odd years the firm has invested around $3.1 billion in private equity, including co-invests, and returned around $2 billion. The Everstone Group has total active assets under management of $7 billion.
Mid-market investments
Everstone’s investee companies are mid-market companies reporting $15-$25 million in EBITDA, and it is focused on control transactions. With valuations in the Indian markets going up, Mehra is seeing cheque sizes increase from $80-90 million to $100-120 million. “In the mid-market, we are the only solely focused investor in control transactions,” he clarified.
Around 70-80 per cent of Everstone’s investments are in the healthcare and technology sector, though it has also made some significant investments in financials, consumer, and industrials. Its existing portfolio companies include Pharmeasy, Everlife, Translumina Therapeutics, logistics and warehousing company Indospace, among others.
After the highs of over $40 billion seen in 2021, private equity investments have been on a decelerating trend in India, and while the first nine months of 2024 saw a 39 per cent rise in flows at $10.9 billion, the third quarter saw a 29 per cent sequential decline, according to LSEG. Mehra, however, said that the environment was robust, especially in the mid-markets space where the firm is active.
“I think the demand for capital in the last couple of years continues to be reasonably robust.” It was the early-stage venture tech space that had seen a sharp decline in capital, he added. Bain & Co has forecast PE flows at $130 billion by 2030.
Promoter control transactions
He pointed out a higher propensity in India for control transactions, with promoters willing to cede control. The share of such transactions increased to 35 per cent from 9 per cent in 2012. “India’s control market in dollar terms is bigger than that of China today. So I think we are set for a very robust environment; we’ll have a little bit of shakeout, which is always good for the segment,” he added.
The other reason for Mehra’s optimism is the opportunity for lucrative exits. “We’ve had fabulous exit years.” India had a robust public market, ready buyers and strategics, vital factors for exits. “And in India all three are firing.”
Last year, the firm partially exited from Burger King India, while fully exiting SJS Enterprises. One of its investee companies, Indostar Capital, sold its subsidiary Indostar Home Finance to global PE firm EQT this year.
The firm made a six-time money deal in its exit of SJS with a 28 per cent internal rate of return in dollar terms, after holding it for seven years. Mehra said that while the mode of exit depended on whatever yielded the best outcome to its investors, selling to other PE firms was a favored mode since it was quicker and better.