Business
Valuations in India up, need to be seen relative to growth: Scott Nuttall, KKR co-chief executive
In an interview with Vinod Mahanta, Nuttall discussed investing amid geopolitical flux, the firm’s India strategy, how AI could reshape private equity and whether markets are headed for a correction. Edited excerpts.
What are the most compelling opportunities to put money into over the next five-seven years?
India and Japan are our two most active investing markets in Asia by some margin-obviously different stories. India is about consumption, growth and upgrades. Japan is more corporate reform. But both have significant opportunities for us. Real assets, including infrastructure, are a big opportunity and a place we’ve been very active. Governments want a partner. There’s significant capital need and not enough available capital. Private credit continues to be a significant opportunity.
‘Priority Strategic Market’
Private equity—we’re still finding opportunities around the world as well, in particular companies that can be operationally improved. Last year was our most active investment year ever.
How does India fit into your global strategy, especially over a five-year window?
It’s a priority strategic market for us, full stop. India is an incredibly compelling place to invest capital, which is why we’ve been so active. It’s a combination of elements: growth—you can’t find many places where you’ve got an economy that large growing that fast. It just doesn’t exist in many places. Young, dynamic population that is spending more, very active on the digital front. Innovative entrepreneurs abound. And you’ve got political stability, so you have significant growth plus stability underpinning the risk. We’ve done buyouts, growth, impact investing, infrastructure, real estate, credit—everything we do at KKR, we’re able to do in India, and we want to do more.
What’s your investment number for India over the next 3-5 years?
If you look at what we’ve done over the last five years, it’s $9 billion. I’d say it (investment plan) is in the tens of billions. But we’re not big on putting out a number. I would expect you are going to see our activity increase from here.
With strong GDP growth, a buoyant IPO market and rising domestic capital, is India getting expensive or do private markets still offer meaningful valuation gaps?
There’s no doubt the market has moved up, but we’re still finding value. Think about our strategy. In many instances, we’re active owners. Also, part of the reason multiples have gone up is India has a lot going for it. Global investors have realised the growth, so more capital is going to Indian markets. We’ve seen the IPO market and public markets expand significantly. The bond and financing markets are developing. And it’s not just the multiple, you have to look at the multiple relative to growth. Part of this is India was probably cheap, and perhaps it has become less cheap over time as people realised everything we talked about.How do you view exit conditions in India?
Around the world, we exit investments in multiple ways—through strategic sales, IPOs followed by phased sell-downs, or leveraged recapitalisations where we reintroduce leverage and take dividends. In India, 10-15 years ago, not all of those options were readily available all the time. Now they increasingly are, partly because financing markets have developed. Around the world, our exits are about a third, a third, a third: strategic sale, IPO, “other”. India is looking more like the rest of the world, with more exit opportunities.
AI can disrupt industries and change investment theses. How are you looking at it?
First, you need to look at everything you already own and sort out: is AI an opportunity, a threat, or a question mark? If it’s a threat or a question mark, it may be something you should think about moving on from faster.
