MUMBAI: Private equity firm ValueQuest is ramping up exposure to banking and financial services in its second fund, betting that balance sheet stress in the sector has eased enough to reopen investment opportunities, a top executive told Mint.
This marks a shift from its first fund, when the firm largely stayed away from the sector due to concerns around balance sheets and asset quality. With cycles stabilizing after the post-pandemic stress, it now sees renewed opportunity across , wealth management and technology-led financial services.
“We want to also now spend a lot more time on banking and financial services. We didn’t find the right opportunity in the last fund deployment cycle,” said Pushkar Jauhari, managing director and fund manager at ValueQuest. “Post-covid, there was a lot of balance sheet stress, asset quality stress.”
Advisors tracking the sector said the current environment offers a favourable entry point, with in several financial services segments correcting from earlier peaks. “The cycle is now in the downturn, so it’s a good time to get entry because the valuations are on the lower end of the spectrum,” said Mohit Agarwal, executive director – tech at Unaprime Investment Advisors.
He said financial services is a cyclical business dependent on macro and geopolitical factors, making entry timing critical, especially for private funds targeting IPO-bound companies within a three-to-four-year window. Agarwal added that the sector is entering a recovery phase of the credit cycle, assuming current geopolitical disruptions such as the West Asia crisis remain short term.
In its first fund, ValueQuest’s exposure to financial services was limited to tech-led plays like Zaggle and ToneTag.
The firm is also sharpening its focus on climate and energy transition, alongside core sectors such as consumption, healthcare and manufacturing.
ValueQuest, which has backed firms such as and Wow! Momo, is targeting a ₹3,000 crore corpus, with an additional ₹1,000 crore greenshoe option, a sharp step-up from its maiden fund of ₹1,350 crore.
At the same time, it is writing larger cheques, with ticket sizes rising to $15–35 million from $10-17 million earlier, allowing it to take more meaningful positions in target sectors.
ValueQuest has also invested in companies such as Rentomojo, RR Kabel, Veeda, Unimech, PSL, Melorra, and TBO Tek.
Overseas LP focus
As it scales up, the firm is also looking to diversify its investor base, with a higher share of overseas capital in the second fund.
“We already have got global family offices in the new fund, and we are currently in talks with both domestic and global institutions for the fund raise,” Jauhari said.
In its previous fund, global investors accounted for about 5% of the corpus, largely from family offices. The second fund has already raised about half its target and is expected to close by the end of the year.
On deployment, the firm has committed around ₹400 crore across two deals, with a third in the works.
ValueQuest has seen multiple exits from its first fund, including six listings, with at least two portfolio companies preparing to go public this year.
“We have deployed about a third of our capital in late stage deals where we back companies with an IPO horizon of upto two years and where our target holding period is three to four years. We might not necessarily sell in each listing but it opens up liquidity for us,” said Jauhari.
Separately, ValueQuest runs a Tristar strategy targeting investments in sectors such as aerospace, defence, manufacturing and energy transition.
The fund is led by Aniket Dharamshi, managing director and fund manager, along with Arvind Ananthanarayanan, director of investments, and is targeting a corpus of around ₹2,000 crore. This fund is expected to close in the next couple of months.