Welcome to our ‘Fund in Focus’ series where we profile our member VC funds, underscore their investment philosophy, and highlight some of their interesting work. Today we speak to Parag Shah, Partner of Amara Partners where he sheds light on the fund. Amara Partners is an India-focused mid-market private equity fund providing growth capital to businesses in sectors like manufacturing, financial services, consumer, and healthcare. With a philosophy rooted in institutionalizing companies, Amara Partners supports entrepreneurs with operational expertise, leadership development, and M&A strategies. Anchored by industry stalwarts like Anand Mahindra, the fund's unique blend of compounder and multiplier strategies ensures sustainable growth and value creation. Their focus is on profitable, cash-flow positive businesses ready for the next phase of growth.
Fund In Focus: From Growth to Scale - How Amara Partners is Redefining Mid-Market Investment in India
Parag Shah, Partner,Amara Partners
Spokesperson: Parag Shah, Partner,Amara Partners
1. What is the investment philosophy of Amara Partners?
Amara Partners is an India focused mid-market private equity fund providing growth capital to businesses operating in Manufacturing, Financial Services, Consumer and Healthcare.
Our investment philosophy has been shaped by our past experience in building the private equity arm at Mahindra Partners. Over 15 years we backed a diverse group of entrepreneurs through various sectors and stages of investment - from incubation to growth equity, to M&A, and turnarounds. Having seen 30+ journeys, we understand that the mid-market segment needs value-added capital, including operational expertise, leadership team development, supply chain optimization, building robust financial controls, processes and systems, and expansion via inorganic growth—in short, 'institutionalization'.
This approach has consistently proven to be a roadmap to success, and we want to continue the thesis at Amara. MSME’s in India will drive the next phase of growth, and we do see a large white space for capital to come in and create returns.
2. How has Mr Anand Mahindra’s involvement as an anchor limited partner shape the vision for the fund?
Having Mr. Anand Mahindra join our Advisory board and being an anchor LP into Amara Partners was a tremendous validation for us. The leadership team at Amara Partners has cumulatively spent 45+ years at the Mahindra Group. Mahindra Partners, essence and learnings led to the genesis & philosophy of Amara Partners, and therefore, our DNA is linked to what we learnt there.
We intend on continuing the same strategy, philosophy, and culture where we:
- Partner with strong entrepreneurs to support their next phase of growth.
- Do not tinker with the core of the business but help the founders in areas where they may not have deep experience.
- Help these businesses institutionalize.
We aim to create sustainable companies and deliver superior returns / create value for all stakeholders involved.
3. Can you elaborate on Amara Partners’ core value proposition of institutionalizing businesses? How does this approach differentiate Amara from other funds in the mid-market and venture capital space?
Institutionalization can take many forms, and we recognize that every fund has its own model. First off, we do not tinker with the core of the business and promoter. We support them around the core in all areas where the promoters would either have not seen activity (such as M&A) or where we can bring in expertise which is an order higher than the current in-house team.
At Amara Partners, we have built our approach around a few core pillars that reflect our philosophy of long-term value creation. First is how we leverage our operating network to companies we work with. While we certainly bring people at the highest level for strategic advice and long-term vision, we would also collaborate in the more granular aspects of the business; whether it is improving factory-level efficiency, streamlining procurement processes or optimizing the supply chain; we engage and provide access to a deep pool of seasoned hands-on operators to bring the operating muscle. Another critical aspect of institutionalization is ensuring the business adopts processes, systems, and controls early on. Drawing from our experience of scaling and listing multiple companies, we have seen firsthand how valuable it is to instil such practices in a way that it becomes a way of life & is woven into the culture. Third, we have a playbook for helping companies in inorganic expansion. Most M&A’s fail post-acquisition as integration is a big hurdle. We have built a track record of setting up M&A teams, driving dozens of bolt-ons and ensuring basics such as incentive alignment & post-merger integration are taken care of.
A lot of these above practices are successfully prevalent in corporate India, and this is where we lean for experience and guidance. As we joke internally, for many years, we were a corporate with a PE mindset now we are a ‘PE with a corporate mindset.’
By focusing on ‘institutionalizing’ the business early and providing strategic and operational support, we ensure that these companies are prepared for decades of sustainable growth and long-term value creation.
4. With stalwarts like Anand Mahindra, MM Murugappan, and Rafique Malik on your advisory board, how do you leverage their experience and networks in guiding investment decisions and portfolio companies?
We have a marquee board of advisors and LP’s who are Industry stalwarts having built India’s largest institutions, more importantly they have done it with the highest level of governance and have created value for the entire ecosystem. We try and imbibe their ethos and marry it with our investment style to create steady, predictable, repeatable wins. The engagement is on multiple levels starting with sectoral insights and a live view on macro, which helps us flag any opportunities or stress that sectors might undergo. Second, from time to time, on selective opportunities we do get their feedback and advice. This could range from views on promoters, sectoral insights, reputational checks, and channel checks. Last and the most important, they serve as a phenomenal source of investment opportunities as well as ongoing advice.
As we onboard new limited partners from diverse backgrounds, our focus is to expand our LP base in a way where we can collectively add increasing value to our portfolio.
5. Amara Partners employs both Compounder and Multiplier strategies in its investments. Could you explain how these strategies work together to build a balanced and high-growth portfolio?
Our portfolio will be built on a core of Compounders: deals which comprise of companies that are established, cash flow positive profitable companies belonging to sectors where we have worked before. This would 70% of our investible capital and should result in our fund being returned with healthy returns.
30% of our capital would go to our Multipliers: Strategy for co-investment opportunities, where we look at high momentum companies with positive unit economics (and either profitable or with a clear path to profitability) and a strong cap table. This is the alpha creator in the portfolio and can help us deliver superlative returns
6. You are looking at sectors like manufacturing, financial services, consumer, and healthcare. What trends are you seeing in these areas that excite you, and how do you identify companies that fit into your investment thesis?
We are extremely excited about the Indian manufacturing story. It is a perfect storm of internal capability meeting a rising demand, external factors shifting the supply chains from a unipolar to a more resilient model and political will to effect this change. India is one of the few countries that can offer scale comparable to China, making it an attractive alternative. The government is stepping up too with its Make in India initiative & PLI schemes designed to strengthen India’s manufacturing capability. Certain sub-segments such as Electronic Manufacturing, Auto Components, Packaging, Precision Engineering and Building Materials are quite active, and we are seeing healthy deal flow. Our investment in Lumax Auto, a Tier I auto-comp supplier was due to its robust fundamentals, strong R&D capabilities, and a strategic growth plan centred on building a platform.
Financial Services is the backbone of the economy. India's banking sector is seeing strong credit growth in retail, SME segments, and an upswing in the real estate cycle. This presents opportunities in digital lending (personal and MSME), housing finance, and investment platforms for retail investors. Our investment in Fibe (EarlySalary), a leading fintech in consumer lending, aligns with our mission to provide reliable credit solutions and empower India's workforce.
As India grows into the third-largest consumption economy, we are excited about some key trends: premiumization across categories like apparel, footwear, and jewellery; rising demand for new-age brands in staples, durables, and appliances especially displacing the traditional brands; and them expanding offline via GT and MT, showing the success of omni-channel presence. FirstCry, an investment we made at Mahindra Partners, is a perfect example of a consumer brand with a strong omnichannel presence, led by a solid founder who marries frugality with a clear focus on growth.
In healthcare, we have seen the success of single specialty chains with our investment in Centre for sight in from Mahindra Partners, and we are particularly bullish on this sub-segment. The investor interest in single specialty healthcare delivery in India stems from the well-established profitable unit economics in various sub-segments. Some key segments of interest include Mother & Child care, Oncology, IVF, and Eyecare.
7. What challenges and opportunities do mid-sized companies present, and how does Amara Partners plan to support these companies beyond just providing capital?
Our entire raison d’etre is to provide value added capital to mid-market companies. The value being that we are a partner to the entrepreneur in what can be a very lonely journey. Our typical entrepreneur partner is a second-generation promoter who is steeped in the business, who like us is a steward (us of capital and them of their legacy) but are eager for growth and for taking their company to the next level. Our one endeavour is to provide them all the tools they would need and the capital to use these tools effectively.
This can be in the form of experts (board members, advisors, key team members, consultants) who can guide on things ranging from the mundane (supply chain, procurement, systems, and processes) to the arcane (M&A, leadership transition, IPOs, new geographies).
8. In some media reports it has been stated that Amara Partners offers strategic support in areas like technology, organization building, and inorganic expansion. Can you provide an example of how this hands-on approach has helped a portfolio company achieve its growth potential.
We partner with entrepreneurs and do not tinker with the core. We provide support around a functioning core business, making it stronger, helping it grow faster and institutionalizing it. This manifests in the form of the company becoming a target for later stage capital or being ready for a strategic partnership or to head to the capital markets to lead an independent life.
There are multiple stories over the last two decades where we have made key interventions, have had success and failures, and these now get passed down to the team as learnings.
- A logistics company where we brought in a dramatically different approach to the prevalent thinking in the market: Taking an asset light, high ROCE approach. This was rewarded well as the company listed.
- A consumer internet platform where we were able to meld a large offline store presence with online leadership. Building out omnichannel capabilities before it became a buzzword.
- A healthcare chain, where we strengthen the M&A program via team member addition, sharpening the evaluation process and broadening the sourcing process. Brought in higher rigour as well as a higher volume of acquisitions.
- Multiple SaaS companies where we helped with GTM via our relationship with a large system integrator as well as helped set up later stage rounds through our ecosystem of funds.
Each of these companies was at a different stage and needed specific interventions. Working with founders as a partner and letting them play to their strengths has paid off.
9. With the first close target set at ₹400 crore, what are your plans for scaling the fund? How do you see Amara Partners evolving over the next few years in India’s dynamic private equity landscape?
We see a gap in the sponsor ecosystem focusing on mid-market companies in India. The best operators now look for minimum cheques of anywhere between $50-100 MM whereas there is a sea of companies looking for $10-20 MM of value-added capital.
This is the segment we would focus on and via our current fund, look to make 10 to 12 investments of around $7 to $10 MM each. A fund size of $100 MM (850 Cr) felt like the right mark. We are looking at a base target of INR 600 Cr and a greenshoe of INR 250 Cr, we are currently through 80% of our base target.
We see ourselves focusing on this mid-market segment and slowly growing our deal sizes as the economy naturally grows. There are going to be some interesting opportunities which can exploited, whether it is sector specialists focusing on manufacturing, climate, sustainability, healthcare, or capital which specializes in certain journeys such as pre-IPO, secondaries, etc.
10. Tell us the top three aspects Indian entrepreneurs and start-ups should keep in mind while approaching Amara Partners for funding.
We like to use a quip that we like “boring businesses with cashflow.” In clearer words, we like business which are in a stable industry, are profitable and are cashflow positive. What we also like is a desire for change, to go to the next orbit.
We like second-generation entrepreneurs who are looking for a value-added partner to help them pilot their business into its next phase of growth.
The three things to keep in mind, while approaching Amara Partners, are:
- Is your industry established? We bring in private equity / growth capital in established industries, not venture capital to change consumer behaviour or precipitate latent demand.
- Is your business model sorted? We back entrepreneurs who have their business model figured out and are looking for the next phase of growth. Their business is already profitable, cash accretive and needs capital and guidance to enter a new orbit.
- Are you ready for change? The hallmark of a successful entrepreneur is innate confidence but are they ready to bring in a partner and consider their advice, especially in areas outside their circle of competence.