Investment Strategy

Discovering Future Leaders

As pioneers of the Indian private equity industry, our team is adept at identifying outstanding entrepreneurs and management teams of emerging businesses. We look for companies that have a clear business strategy with significant opportunities to scale up with a defendable market positioning.

While we have a preference towards sectors such as Pharmaceuticals, Life Sciences, Healthcare, Consumer, Technology & Financial Services, we are happy to evaluate investment opportunities in companies in other sectors with a differentiated business model that mirrors India's growth story.

Businesses should ideally have a strong competitive edge and long-term growth potential in one of the following areas:

  • An Innovative business model
  • Growth opportunities to gain regional or national market leadership
  • Opportunity for consolidation if from a fragmented industry
  • An IPR driven business with technology, product or a clearly differentiated market opportunity

Along with the above, we look for outstanding management teams:

  • Experienced and passionate people with a disciplined and execution-led approach
  • Hunger for growth and a collaborative mind-set with due respect to partnerships
  • High level of integrity

We follow a stringent evaluation process. Having a credible business plan that supports the need for growth capital and a clear exit strategy for investors is an important criteria.

Currently, while we invest significant minority stakes in private companies, in exceptional cases we also participate in management buy-outs. Additionally, in case of an outstanding business opportunity, we are willing to participate in listed companies.

Investment Focus

Partnering Businesses That Mirror India's Growth Story

Global investors are betting big on India's long-term growth story. India is today one of the most attractive emerging markets across Asia with a billion plus captive consumers. Kotak Private Equity is well positioned to develop compelling local investing themes.

Through macro research, in-house analytics and frequent industry interactions, we identify industry and socio-economic trends, local consumption patterns and need-gap opportunities on an ongoing basis. With a cumulative experience of successfully investing in over 100 growth companies, we regularly refine our investment focus based on emerging trends, sectors and investment opportunities.

Since inception, our focus sectors have mirrored the Indian economy's growth story in terms of scale, competitive advantage and innovative business models. Over the last several years, we have backed some of India's most successful entrepreneurs in sectors like:

  • Healthcare & Life sciences (pharmaceuticals and biotechnology)
  • Consumer businesses (FMCG, retail, media & entertainment)
  • Light manufacturing
  • Agri-businesses and food processing,
  • Information Technology (software products, services and IT-enabled services)
  • Infrastructure-led services
  • Financial Services

At Kotak Private Equity, we work as strategic partners with companies that demonstrate one or all of the following value-oriented qualities:

  • Sustainable competitive advantage that can be leveraged internationally
  • Deep, untapped and fast growth-led domestic market opportunity
  • Acquiring scale and sector dominance

Investment Value Creation

Accelerating Growth through Value Addition

At Kotak Private Equity, we believe in partnering with companies, not operating them. We partner to accelerate growth through need based strategic value-addition in a variety of ways. In addition to capital, we bring our expertise, experience and commitment to create a shared vision and value.

We follow a four point Value Creation Metric:

  • Business Strategy Enhancement
    Working with the company board and management team, we debate and discuss to arrive at a long-term strategy that captures the competitive advantage of the firm. A sound business strategy is the first step in creating sustainable market domination and long-term leadership for the company.
  • Operational & Structural Improvements
    Operational efficiency is one of the key areas where we work with the company. We work with management teams to identify bottlenecks to generate higher returns by restructuring capital, optimizing costs, streamlining manpower and revenue streams. We enable this through a multidisciplinary team of professionals comprising of business strategy experts, legal & tax experts and management consultants.
  • Catalyzing Talent Acquisition
    We bring significant brand power, recognition and network strength to our portfolio companies which in turn helps them attract the best talent in the industry. Inculcating the right talent and developing robust systems and processes is the key to achieving the next level of growth for most emerging businesses.
  • Enabling Governance & Professional Reporting
    We work with leadership teams to ensure the best standards of governance and reporting through regular MIS, external and internal audits and formal board processes.

We believe that we can never substitute an entrepreneur's energy, passion and drive. Hence, at Kotak Private Equity, we like to complement these skills with strategic growth advice, skill enhancement and operational efficiency to disproportionally deliver on his business plan.

Investment Process

Treating Capital with an Ownership Mindset

At Kotak Private Equity, we follow an investment process that has been developed through years of investment experience. The investment process captures the sensitivities and challenges of growing businesses in an Indian business environment as well our past experiences in dealing with Indian entrepreneurs.

We typically follow a four step Investment process that helps us treat capital with an ownership mindset.

  • Deal Sourcing and Evaluation
    We leverage our in-house research to source and evaluate opportunities. In doing this, we use multiple channels of our network of relationships, the Kotak Mahindra Group's business relationships and industry networks
  • Due Diligence & Investment Commitment
    We have a disciplined and rigorous due diligence process by which we evaluate deals that fit into our investment criteria. Ideally, we invest in 2-4 deals in a year, with each deal requiring between 120-180 days to be completed
  • Investment Structure & Co-investing Opportunities
    Once the investment selection is complete, our team prepares the investment structure and identifies co-investment opportunities, if any, This exercise is done in close collaboration with the company's management team to align interests
  • Monitoring and Value Addition
    Post transaction, designated members from our team work closely with the company's management to create share holder value. As per agreed timelines and performance goalposts, we work towards a timely and profitable exit.

Since its inception, Kotak Private Equity has been the preferred investment partner with local management teams on account of its transparent and rigorous investment process and significant value creation.

Investment Structure & Size

Crafted Solutions for Growth

We design bespoke investment structures for each of our portfolio companies based on their individual growth requirements. We believe in patient investing through structured instruments that help build partnerships with management teams and deliver on mutually aligned goals and incentives.

Investment Size and Structure

  • Investment ticket size of USD 20-40 million
  • Opportunistically larger transactions with co-investment from LPs
  • Significant minority ownership with active board-level participation