In this edition, we explore PE perspectives on escalating India-Pak tensions, study contrasting LP views on China, and uncover the growing potential of the Philippine PE market.
Will investors bet on long-term opportunities amid political unrest?
For India, which has seen growing interest from global allocators and strategic investors, macroeconomic stability has always been a critical foundation for sustained capital flows.
But, with renewed tensions along the Pakistan border, the unpredictability of regional flashpoints is now in focus.
How businesses in the country navigate this period of uncertainty will reveal much about their risk appetite and strategic priorities—particularly as they balance long-term opportunities against immediate volatility.
“Typically, these kinds of situations do add some tensions in the minds of investors… but global PEs and LPs take a broader view where short-term bumps are factored in,” said Ramesh Kannan, a senior partner at Indian PE firm Somerset Indus Capital Partners.
Headwinds of uncertainty always put pressure on dealmaking—even if it is for the near term. This time around, it comes just when India was gaining traction with global investors, thanks to its deft handling of geopolitical risks in the past and growing appeal as a stable alternative in the ‘China Plus One’ strategy.
According to Grant Thornton, India’s deal landscape blossomed in Q1 2025, with 636 transactions worth $24.4 billion—up 28% in volume and 34% in value from Q4 2024. The spike, driven by robust M&A and PE activity, marked the highest quarterly deal count in three years.
However, the momentum tapered in April, recording 214 deals worth $5.4 billion—a sharp 48% decline in deal value from March’s $10.5 billion, signalling a potential cooling of sentiment amid growing market uncertainty.
Even so, the broader economic outlook offers some assurance. Earlier this week, Moody’s noted that it expects only limited economic disruption in India, primarily because of the country’s minimal trade exposure to Pakistan—it accounted for less than 0.5% of India’s total exports in 2024.
Moreover, the stock markets—known for their tendency to react at the faintest sign of conflict—have surprisingly held steady so far.
“Stock markets operate more on sentiment and less on logic … there could be some minor turmoil and turbulence but that is expected to vanish soon,” added Kannan.
US, SE Asia, and Middle East LPs take divergent views on China
At a time when US limited partners’ allocations to fund managers in Greater China have hit rock bottom, Middle Eastern LPs have been upping their game.
For Stanley Sun, director of PE at Abu Dhabi sovereign investor Mubadala Investment Company, China continues to stand out as a very interesting investment destination.
“What has changed from before is we used to focus on more high-growth opportunities, but as the country’s economy enters a more steady pace of growth, we’re now seeking opportunities that will allow us to become significant minority or controlling shareholders,” said Sun, in a panel titled The investor playbook: challenges and low-hanging fruit in China’s markets at SuperReturn China 2025 on Tuesday.
The sovereign investor has invested $17 billion in China across all key industries, and intends to “replicate that success across the entire Asia,” he added.
Mubadala’s views stand in stark contrast to those of many US LPs who are “allergic” to China investments, with some even asking GPs to opt them out of China deals, according to Yingwen Chin, partner at alternative investment advisory firm Albourne Partners.
Chin observed that in recent months, several SE Asian sovereign wealth funds have launched ‘in-country programmes’ as part of their China plus-one strategy, asking Chinese GPs to bring portfolio firms or expertise to SE Asia, or help build sector-specific supply chains in exchange for funding or land.
“It’s almost like a little ASEAN corridor of the supply chain is starting to be built. But that’s really early days,” Chin added.
Philippine PE maturing
The Philippines’ PE sector is showing signs of maturity, driven by increasing sectoral diversification and a wave of large-scale exits. From financial services and healthcare to business services and infrastructure, both companies and investors are actively preparing for sale transactions.
Private capital inflows have seen remarkable growth, expanding nearly fivefold over the past decade to more than $1.3 billion in 2024, according to PwC.
The Philippines faces a relatively modest US tariff of 17% under Trump’s new trade policy, positioning it as an attractive destination for trade and investment flows redirected from markets facing steeper tariffs.
The PE industry is also benefitting from government support through the “Build Better More” initiative, which includes nearly 200 flagship infrastructure projects valued at 8.8 trillion pesos.
Yet, exits remain a challenge due to valuation gaps, limited liquidity, and buyer caution amid broader economic uncertainties.
Beyond capital market development, strengthening corporate governance is critical for sustaining investor confidence. The OECD has recommended that regulators in the country be empowered with clearer mandates to enforce corporate governance standards.
Private credit: from backstop to front seat
Private credit fundraising is on a roll, with Dubai-based Synergy Capital targeting $1 billion for its third Asia fund, focusing mainly on India. And it’s not alone.
Avendus Group has raised over Rs 1,000 crore ($118 million) in the first close of its third private credit fund, while Neo Asset Management has secured $233 million for the first close of its second flagship fund. In other developments, Franklin Templeton marked the first close of its debut India-focused credit AIF at Rs 205 crore, while InCred Alternative Investments pulled in $70 million for a special situations fund.
These deals underscore how private credit—once dismissed as a second-tier alternative to equity—is no longer a fallback for distressed borrowers. It’s increasingly the first call for growth-stage and PE-backed companies seeking non-dilutive capital, whether for expansion, bridging to IPOs, or refinancing high-cost liabilities.
Meanwhile, in Singapore, Granite Asia collected $250 million for its first-ever private credit strategy. Other private credit investors tapping Southeast Asia include global asset manager BlackRock and Australian specialist Zagga.
Top PE developments
TPG has so far raised $402 million for its maiden Asia mid-cap fund, TPG Emerging Companies Asia.
Affinity Equity Partners has acquired Malaysian frozen food producer Golden Fresh, marking its second SE Asia deal this year after Indonesian gummy bear maker Yupi.
British International Investment has made its first solar bet in India, injecting $100 million in ReNew Photovoltaics, while TPG is buying a 35% stake in pharmaceutical firm SCHOTT Poonawalla.
