In this edition of IVCA Private Equity Pulse, Udai Dhawan, Founding Partner & Head of India at Affirma Capital, shares why the firm is doubling down on India's mid-market opportunity. He discusses the structural drivers shaping PE deployment—rising financialization, expanding discretionary consumption, and a new generation of founder-led businesses. Udai outlines Affirma's disciplined, partnership-driven model, backed by deep governance, M&A, and global market expertise, and reflects on the strengthening exit environment and the growing role of domestic capital in India's private markets.
Mid-Market PE Reimagined: Udai Dhawan on Value Creation, Discipline, and India's Expanding Domestic Capital Base
Spokesperson: Udai Dhawan, Founding Partner & Head of India -Affirma Capital
Spokesperson: Udai Dhawan, Founding Partner & Head of India, Affirma Capital
1. Affirma Capital is doubling down on India with the Agastya Capital India Growth Fund. What is driving your conviction in India's mid-market segment at this point in the cycle, and how do you assess the quality of deal flow in the $75–300 million enterprise value range?
India remains an attractive investment destination for the coming decades. Our conviction is grounded in strong, long-term macroeconomic fundamentals: a favourable demographic dividend, rising per capita incomes, rapid urbanization, and continued financialization of the economy. These structural shifts are expanding discretionary consumption and creating strong tailwinds for the historically underserved mid-market segment.
On the supply side, the availability of risk capital and a significantly improved business environment have triggered a mindset shift among entrepreneurs. Younger talent is far more willing to take risks and build companies rather than pursue traditional career paths, driving a rising trend of new-age and first-generation entrepreneurship.
The above dynamics are creating robust deal flow in the $75–300 million enterprise value range. At the same time, several legacy PE funds have moved upmarket, prioritizing larger deals and cheque sizes north of $100 million. This has opened a clear whitespace in the mid-market. With our target cheque size of $25–50 million, we are well positioned to back high-quality businesses led by strong founders—where our partnership approach and value-creation capabilities can help them scale into national or regional leaders.
2. You've noted a sharp focus on profitable, capital-efficient family-run businesses and first-generation entrepreneurs. What governance, partnership, and value-creation approaches work best in these contexts?
Over the past two decades, Affirma Capital has institutionalized a time-tested value creation playbook for our portfolio companies. Some of the key elements of the playbook include augmenting talent, driving inorganic growth, and leveraging our international footprint to help our companies expand globally.
Over the 23 years of investing in India, we have built a strong talent network, both at the senior management as well as at the Board level, which our portfolio companies benefit from. We also work closely with the management on key leadership hires as well as tap into seasoned advisors based on our investee company's requirements. We play a hands-on role in institutionalising the business by bolstering the Board, strengthening governance, improving audit and reporting standards, and defining KPIs for the management.
Having facilitated over 50 bolt-on acquisitions across the platform in the last 6 years alone, we bring significant M&A experience to our investee companies, helping the management scout, evaluate and consummate attractive acquisitions. Our objective is to turbo charge the company's top line and earnings by helping them expand capabilities, clients, business verticals as well as geographies.
Lastly, given our emerging markets footprint across Asia, Africa and the Middle East, we are uniquely positioned to enable access to our investee companies to tap some of the fastest growing markets in the world.
3. With Agastya focusing on consumer, financial services, life sciences, and technology—particularly B2B/B2B2C models—what macro or structural indicators make these sectors compelling for the next 5–7 years?
In each of the four sectors we target, we have a clearly identified investment rationale based on macro attractiveness, growth drivers and structural indicators.
Increasing access to formal credit, financialization of savings and a high mobile / data penetration serve as key drivers to the opportunities we target in financial services.
As India transitions to a middle-income country, increasing GDP per capita and discretionary spending are creating attractive opportunities for us in the consumer sector. In healthcare, hospitals and diagnostics remain underpenetrated and sectors like pharmaceuticals, medical devices and consumables will benefit from India's high-quality talent and low-cost manufacturing. Finally, Indian companies are starting to disrupt business models using technology and the rising digitization trend globally will benefit tech services companies so long as they are AI ready.
Our value-conscious approach aligns well with our preference for B2B or B2B2C models where we can partner with structurally profitable, cash generative business while benefiting from the tailwinds of the rising domestic consumption in India.
4. The fund is reportedly seeing interest from a diverse mix of global LPs, domestic institutions, and Indian family offices. How do you interpret this shift in LP appetite for India-focused PE strategies, and what more is needed to deepen domestic institutional participation?
India has clearly emerged as one of the preferred destinations in Asia for global LPs to generate attractive risk adjusted returns. While LPs continue to pursue pan Asian strategies primarily from a diversification perspective, there is also strong interest in India-focused strategies due to the rising scale and breadth of opportunities.
Over the past decade, we have already seen the growing importance of domestic capital in the public markets, whether it be in pricing IPOs or driving demand for secondary blocks. Domestic investors are playing a pivotal role in India's financialization journey, and we expect this broad theme of their presence and influence growing in the private markets as well.
We are seeing the change across all segments. Domestic institutional pools, including insurance companies, are emerging as meaningful allocators to private markets. Large family offices in India have grown substantially in both scale and sophistication. Finally, HNIs—not just in major metros, but also from Tier-2 and Tier-3 cities—are participating more actively in the alternatives space. This shift will strengthen the overall stability and depth of the private market and act as a key catalyst for entrepreneurial activity in India.
However, a lot more needs to be done. Unlike overseas markets where pension funds are among the largest contributors to private markets, their participation in alternative assets in India is still nascent, presenting a significant opportunity. Unlocking this pool of capital will require continued regulatory evolution alongside the development of appropriate governance and risk-management frameworks. Over time, with conducive regulations and growth in confidence, we expect pension funds and other large domestic institutions to play a much more meaningful role in India's private capital ecosystem.
5. With commitments coming in from entities like NIIF and SRI (as reported), what does this signal about the government's role in catalysing mid-market private equity, and how does it help crowd in more private capital?
We do not comment on any specific investor names who are investors in our Fund.
Speaking generally, the government has introduced several initiatives including the AIF regulations in positioning India as an attractive investment destination. Entities such as NIIF, SRI and SIDBI are playing an instrumental role in enabling the growth of the Indian private market. Supporting domestic GPs has a huge multiplier effect on entrepreneurship, employment and the economy. However, there is scope to scale up these initiatives further and a calibrated opening up of the domestic pension market for private investments can have a meaningful impact on catalysing further growth.
6. Affirma's recent exit from TBO Tek and its IPO path stands out. How is your exit strategy evolving in the current market—especially with public markets and secondary transactions becoming more active?
The exit environment—especially for high-quality businesses—has improved meaningfully over the past decade. Public markets have deepened, secondary transactions with financial sponsors have become far more common, strategic buyers are more active, and GP-led continuation vehicles now offer a credible path for holding outperformers longer.
Given that we operate in the mid-market and typically back companies that are 2–3 years from being IPO-ready, all of these exit avenues are available to us. Our objective remains to maximize value for our LPs, but the specific route we pursue is shaped by a combination of factors: the company's maturity and readiness, broader market conditions, founder alignment, and the execution risks associated with each option.
Affirma's recent exit from TBO Tek—where we sold part of our stake to General Atlantic, participated in both the pre-IPO and IPO, and further pared our stake through a series of block trades in the public market—is a good example of how we continue to adapt our approach in today's exit landscape.
7. Given global economic volatility, how does Affirma balance risk while sustaining its India thesis? What have been the most important learnings in underwriting and value creation over the past two years?
What has worked for us is the consistency of strategy and our active, partnership-driven investing approach. With more than two decades of experience, we are among India's longest-tenured private equity teams, and we have benefited from staying disciplined in the mid-market segment through multiple cycles. For example, during the post-COVID boom in 2021–22, private markets were overheated and several fundamentally weak businesses attracted capital at inflated valuations. Despite that, we remained selective and avoided any FOMO.
Equally important is how we partner with founders. Given that we typically take meaningful minority stakes, we are active investors, but we are very deliberate about the role we play. Our focus is on building trust, bringing complementary capabilities, and being genuine value-addition partners—never intrusive, and not trying to run the business ourselves. This balance has been central to our success.
8. Affirma invests across Asia, Africa, and the Middle East. Where does India sit today in the firm's broader strategy, and how are cross-market insights shaping the India playbook?
India sits alongside our global portfolio as a structurally attractive, long-term growth market, and our India-dedicated vehicle allows us to pursue that opportunity with greater focus and depth.
Having completed 101 investments and 67 exits across our footprint, we are in a unique position to recognize key patterns across emerging markets and draw strategic insights to not just sharpen our investment strategy but also help our portfolio capitalize on key opportunities and avoid any missteps. In most deals, a Partner or MD from another region is actively involved, enabling knowledge-sharing, cross-border expertise, and talent exchange. This collaborative approach is a key differentiator and delivers a unique value proposition to Founder-partners in India's mid-market space. We also leverage our global platform—particularly our relationships with bankers, advisors, and industry vendors—to open doors, benchmark performance, and enhance value creation for our portfolio.