Buyouts help PE firms steer companies' future plans

MUMBAI: India's private equity playbook is evolving. Traditionally, PE investors took minority stakes and let founders run the show. Now, they are increasingly acquiring majority or controlling stakes, shaping companies' futures more directly. While minority investments still dominate deal value, buyouts are gaining ground. Between 2021 to 2025, they made up 24% ($71 billion) of India's total private equity investments of $303 billion, making them the third-largest investment category after growth and startup investments, EY-IVCA data showed In a transaction last week, US-based Carlyle agreed to acquire a majority stake in Edelweiss's home finance business for $230 million, adding to the growing list of buyouts reshaping India's deal landscape, particularly in financial services, technology, and healthcare. These transactions are largely led by foreign firms such as Blackstone, Brookfield, Carlyle, Advent, EQT and KKR. Unlike in the past, when founders and business families were reluctant to sell to PE, there has been a "sea change" in attitude, as PE is now seen as a reliable partner, said Vivek Soni partner (PE services) at EY. "Succession issues, exits from non-core businesses, buying out other family members or earlier PE investors, and managing volatility risks are key triggers for control trades," he added. "Historically, India has seen minority stakes and growth capital play out, but the attractive returns and exit certainty of buyout investments eventually took centre stage," said Puncham Mukim, India head of private equity at Everstone Capital, adding that "From a founder's perspective, the new generation has been more open to control transactions and has undertaken large secondary sales to create family offices. " While most pure-play buyouts (excluding infrastructure and real estate) have involved sponsors selling controlling stakes to other sponsors, industry expects founders and families to become the largest source of such trades in the coming years. Mukim added "Sponsors are increasingly acting like strategic investors-building platforms rather than making passive investments." Their ability to attract seasoned professional managers and strengthen governance has helped them run and scale businesses that were previously family-managed. Soni said PE is doubling down on pure-play buyouts as exit returns have been "good". EY-IVCA data showed they realised $48 billion between 2021 and 2025 through exits. Secondary sales accounted for the largest share, followed by strategic exits and stock market listings. While buoyant capital markets offer PE an attractive exit route through IPOs at strong valuations, they are also the biggest competitor in striking control trades. Elevated equity markets raise seller expectations, widen the bid-ask gap between founders and PE buyers, thereby slowing deal closures. End of Article