Global investor KKR is seeing significant opportunities to both deploy and monetize capital across private equity, infrastructure, climate, and credit franchises in the country, Henry H. McVey, head of global macro & asset allocation, chief investment officer of KKR’s balance sheet in a note on India.
McVey was recently in the country along with KKR co-founder Henry Cravis and others on a multi city trip.
“Control deal activity is more robust, local capital markets are deeper, the policy backdrop is more cooperative, and local business leaders are more engaged, ” said McVey. He said infra opportunities for KKR in the country remain outsized. Key areas of focus for KKR remain roads, renewables, logistics, and related assets. In infrastructure, he said that private
sector capital will be required to meet Prime Minister Narendra Modi’s ambitious goals, he said .
Recently the union government approved the launch of a Rs 1 lakh crore Urban Challenge Fund (UCF) aimed at driving market-led, reform-driven urban infrastructure development over the next five years.
” The intersection of favorable urbanization trends_ 35-40% in India versus over 60 % _ in China, differentiated government support, the need to sell assets to raise revenue and drive efficiencies and the structural need for energy production/transmission, ,”all suggest more tailwinds are ahead, especially for those who can bring an operational improvement angle,” he said
Interestingly, this increase in the opportunity set is occurring at a time where it’s survey work shows that most global investors remain underweight Infrastructure, Asia in particular, he said .
He said though consumption remains a growth engine, but the composition is shifting.” The consumption upgrade story remains alive and well, particularly in higher-value services such as healthcare, financial services, and education. ‘Experiences’, particularly related to sports and certain areas of entertainment, are growing faster than ‘Things.”
Consumption story
He said the thesis about wealthier consumers spending more has remained unchanged since their last visit. “What has changed, however, is that lower-income consumers are doing better than in the past. By comparison, some segments of the middle-income population feel less secure relative to my prior visit. Parts of this segment have taken on debt at a time when job security is less certain and real wages are not growing commensurate with cost of living expenses on a nominal basis ,” he said.
Importantly, India, similar to the United States, has a services engine to match its consumption upgrade story. In our view, that combination is rare, and it is why India remains one of the most compelling long-term destinations for global capital, he said.
“India’s strong nominal GDP backdrop of 10-11% should not be underestimated, particularly for investors who can lean in when a sector or company is cyclically out of favor, “he said.
Expects markets to rebound
He’s said though Indian stock markets lagged due to of currency weakness, decelerating EPS, and rising AI concerns but it might change in second half of 2026.
“Fiscal impulses, healthy credit creation, and rising capital markets participation by retirement savers all point to better earnings momentum in the coming year. As a result, we now think EPS for the country could grow in the mid-teens in 2026, “ he said.
He said currency risk now appears more manageable than it did in prior regimes, he said “We now expect less Indian National Rupee depreciation than in the past. The pace of depreciation going forward should be slower than what we observed in 2025 and materially better than the period roughly a decade ago when India ran larger twin deficits amid high oil prices and an unfavorable subsidy/tax mix. Said differently, the external vulnerability feels lower today than it did in prior stress episodes,,” he said.
He said Local manufacturing is improving, but this story will take time. “The more compelling opportunities we see are not in low-value, cheap component manufacturing but in areas such as chemicals, where local demand is strong and
economics are more defensible,” he said.
In private credit the opportunity set feels much more disciplined than what they saw during the non-bank financial company (NBFC) heyday just prior to Covid when NBFCs saw liquidity crunch after defaults by IL&FS, he said.