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India middle-market: Looking for positives

Private equity activity is gradually resuming as India’s economy emerges from lockdown, but investors are wary of paying too much for assets or putting their money behind unsustainable trends

The global bicycle shortage – spurred by an aversion to public transport, gym closures, and an increased focus on healthy living – has come to India. Sales rose 25% year-on-year in June as the lockdown was lifted, according to the All India Cycle Manufacturers’ Association. With multiple reports of individual retailers running low on stock, the association has warned of a growing supply-demand gap.

Bicycles are one of numerous beneficiaries of changing habits in response to COVID-19. “There has also been an upsurge in demand for sports and fitness ,” says Gopal Jain, a co-founder and managing partner of Gaja Capital. The firm has seen this in its own portfolio through SportzVillage, a sports program manager for schools.

For an emerging trend to become a meaningful investment thesis, it must pass the long-term sustainability test. But COVID-19-proof business models already loom large as India’s private equity industry looks for seams of growth in a challenging environment.

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