In the hierarchy of global investing, public markets have long commanded the spotlight. Screens flicker with live indices, brokers place trades at lightning speed, and billions of dollars exchange hands every day. Yet, behind this public spectacle lies a quieter but increasingly consequential arena: India’s unlisted, or private, markets.
For decades, private equity was the preserve of large institutions and family offices. That landscape is changing. As India’s startup ecosystem has expanded to become the third largest in the world—with more than 150,000 companies and over 100 unicorns—investors who wait for an IPO may find that much of the value creation has already occurred.
A recent discussion hosted by Merisis Investment Banking brought these themes into focus, featuring two veterans of the space: Fazal Ahad, Managing Director at Merisis Advisors, and Abhishek Sharman, Founder and Managing Director at Carpediem Capital Partners. Together, they explored how private markets are reshaping investment opportunities for wealthy individuals.
In India, as in much of the world, the criteria for listing have become stricter. Strong businesses are delaying their IPOs, choosing instead to raise successive rounds of private capital. This shift creates a window for investors: the chance to participate in the company’s high-growth phase before it rings the opening bell on Dalal Street.
Private equity, unlike public markets, involves primary capital infusion. The funds do not merely trade ownership from one investor to another; they enable tangible expansion—new factories, retail outlets, technology infrastructure. For investors, this means the potential to participate in growth at its origin.
The rewards of private investing come with a caveat: time. Returns rarely materialize in months, often requiring a 3–6 year horizon. Illiquidity, long considered a deterrent, is better seen as a guardrail—it prevents impulsive exits and compels investors to hold through the natural arc of business expansion.
Contrary to conventional wisdom, risk is not automatically lower in the public sphere. Listed giants have faltered before—IL&FS, Anil Ambani’s group of companies—while smaller, disciplined private firms have grown steadily.
The takeaway, according to Ahad and Sharman, is clear: safety lies not in size or liquidity, but in understanding. Successful investors probe fundamentals: the quality of the entrepreneur, the sustainability of the business model, and valuation discipline.
To that end, due diligence in private markets is exhaustive. Commercial assessments, financial audits, legal and forensic checks, even ESG evaluations—these steps are standard. For individuals without institutional resources, investing alongside professional funds remains the most prudent path.
If there is a north star in India’s private markets, it is the consumer economy. Rising incomes and urban aspirations continue to fuel demand in services, retail, and financial products. Public valuations in these sectors are often inflated; private investments, by contrast, provide more reasonable entry points.
The frontier is not limited to traditional consumer goods. Emerging opportunities span women’s footwear, pet services, specialty restaurant chains, and even funeral services. These are niches where global precedents exist but Indian businesses are only beginning to scale.
Liquidity, once a pressing concern in private equity, is less so today. Beyond IPOs, exits now flow through mergers and acquisitions, secondary sales, and transactions with family offices. Recent examples span refurbished electronics, design services, and consumer finance companies.
For investors, this evolution reduces the perception of being “locked in.” Multiple exit pathways are available, though timelines remain measured.
The allure of private equity lies in its dual promise: the potential for higher returns and the chance to be part of a company’s formative growth story. But opportunity does not erase complexity. These markets are opaque, and risks are multidimensional.
The guidance from practitioners is consistent:
Cap exposure at 25–30% of an overall portfolio.
Seek diversification across sectors and stages.
Prioritize entrepreneurs with credibility and a large addressable market.
Avoid hype-driven, pre-IPO speculation in favor of disciplined, long-term positions.
Most importantly, partner with professionals—whether through curated funds, structured vehicles, or trusted advisors—who bring the resources and oversight that individual investors lack.
Public markets will remain the visible heartbeat of Indian finance. But the center of gravity is shifting. Increasingly, wealth is being created before companies ever go public.
For investors with patience, discipline, and access to the right networks, India’s private markets represent not just an alternative asset class but a critical frontier. The question for high-net-worth individuals is no longer whether to participate—but how.
Watch the full discussion in the link below: