PE firm Multiples Alternate Asset Management is pivoting toward AI-first businesses, trimming exposure to sectors such as voice business process outsourcing and general staffing solutions that could be easily disrupted by technology.
“The moats there are not strong typically,” Manish Gaur, managing director at Multiples, who heads the firm’s enterprise tech investments, told Mint.
The shift began last year, when the firm sold its majority stake in human resources tech and services player PeopleStrong to the private equity arm of investment banking giant Goldman Sachs. The Mumbai-based company had first invested in PeopleStrong in 2017 from its Fund II, which was sized at $555 million, according to private market data intelligence platform PitchBook.
“We bought a services business and pretty much spent all the R&D dollars to really build the products business and make it successful,” said Gaur.
The same year, the firm acquired a majority stake in digital engineering services QBurst in a $200 million deal, marking its first bet in the segment. Over the last year, the PE fund has brought in new top-level management to help with its transformation into an AI-first company.
Multiples is currently investing out of Fund IV, which achieved a first close of $640 million in 2023. In May last year, the PE fund closed its $430 million continuation fund to acquire interests in three companies from its second fund, alongside additional follow-on capital.
Going forward, Multiples is looking for companies that are nimble in how they deliver their services and are actively using AI internally to reduce effort and man-hours taken for routine tasks like coding, design, and testing.
QBurst’s bet reflects a broader shift in India’s enterprise tech landscape, where the opportunity is moving from services to product-led innovation.
“…in India, we do have significant advantages in all tech-enabled businesses, and it was largely limited to services historically,” said Gaur. “However, over the last 5–10 years, we’ve seen multiple new product companies coming out of the country.”
The firm has committed to doubling down on investing in enterprise tech and tech-enabled businesses. Last year, when it announced its acquisition of QBurst, Gaur had said the firm would deploy $2 billion towards such investments by 2030.
Value creation
Multiples targets companies that have raised some growth equity funding, typically after a Series C round or later, when the firms have reached some scale and size, have sizeable revenue and a consistent list of clients.
On the tech services side, due to the sector not being particularly capital-intensive, there are enough entrepreneurs willing to start a business, but don’t have the patience or drive to bring them to a massive scale. They would rather be acquired by larger companies.
“These roll-ups are typically by way of acqui-hires. A business will acquire a high-quality team that understands a particular segment very well, gives them their rolodex of customers, takes their services to its customers, has a unified offering and becomes a better platform company overall,” said Gaur.
Multiples’ portfolio company Quantiphi has made at least three acquisitions since 2024. The most recent acquisition was of UK-based Candyspace on 9 March to help the firm develop end-to-end AI agent applications. The PE firm picked up a minority position in Quantiphi with a $20 million investment in 2019 from Fund II.
Cautious on deeptech
While enterprise tech remains the core focus, Multiples is selectively evaluating deeptech opportunities.
Deeptech, where timelines are long, capex is high and results are binary, investment carry a lot of risk, something that a fund like Multiples would rather avoid, instead opting to come in when scale and revenue are visible. “We may make a deeptech investment, but the most important criteria is if it is the best deal for the fund. It has to make sense from a portfolio construction and the economics perspective.”
While Gaur doesn’t have a mandate of reserving a specific percentage of the overall fund for investing in the sector, he has been looking more closely at it, especially at companies that are on the India-US corridor.
The fund hasn’t ruled out investing in companies that are working on drones, defence tech or even rockets, but they have to reach some scale.