Is Search Fund in India possible? What are the potential challenges?

February 20, 2024

by a searcher from INSEAD in Hyderabad, Telangana, India

Hello SF community! I'm looking to setup a search fund to acquire a mid-sized company in India. In the past I've managed and led a mid to large company in India itself. Although, Search Fund as a concept is not at all known in the region yet. Therefore convincing initial/lead investors is a little tricky and more importantly I'm not sure if it'd be a good idea to get investors onboard who are not comfortable with the SF/ETA model.

Would love to hear thoughts from the community on how I should proceed.

Should I look at raising 60% from outside India and 40% from within the country?
Would US be a good place to look for initial investors?
What are the key concerns that may arise?
I know in India the valuation multiples are quite high when compared to the developed markets. Will that be an issue in convincing the investors to bet?

Given that India is growing fast, would it improve the chances of raising investments from US/Europe etc? Would love to hear any/every thought around this from the community!

Thanks!

Reply by a searcher
from ESSEC Business School in Torrance, CA, USA

Thanks for the tag ^redacted‌. Search fund as a category does not exists in India and since India is still a very young emerging country where most businesses are still run by first-gen entrepreneur, the scope for India focussed search fund is VERY limited. You can use India as a base for cost center (backend) while look for businesses to acquire in mature markets. In my case, my target market is US.

Reply by a searcher
in Jaipur, Rajasthan, India

^redacted‌ that is very interesting that you are going to try this model in India, I haven't come across anyone doing so.

It would be great to be in the loop of how it is progressing if you are open to it.

And if I can share a few connection that can help you, even better.

+6 more replies.

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