Private assets could gradually account for up to 30% of an investor’s overall equity allocation as India’s private markets mature, Multiples Alternate Asset Management Founder, Managing Director and CEO Renuka Ramnath said at Kotak Private Banking’s Take and Counter Take (TACT).
Speaking on whether wealth creation is shifting from public to private markets, Ramnath said private and public markets should coexist in portfolios, with allocations determined by an investor’s risk appetite, return expectations and liquidity requirements. She suggested that an equity portfolio currently fully invested in public markets could potentially evolve towards a 70:30 public-private allocation.
Ramnath said private equity differs from passive investing as managers actively work with founders on strategy, management, governance, capital structure and risk management. “A private equity investor is not an observant investor. He’s a real partner in the business,” she said, arguing that company-building and measured risk-taking can contribute to incremental returns.
She also said investors may overestimate their liquidity requirements, while stressing the importance of manager selection, governance, diversification, risk management and capital allocation when investing in private assets.
In Kolkata, the evolving private-asset landscape could provide sophisticated investors with another avenue for diversification, particularly as wealth managers assess alternatives to conventional public-market exposure. However, allocation decisions are likely to remain linked to individual liquidity needs and risk profiles.
Overall, Ramnath advocated a gradual approach to increasing private-market exposure rather than treating it as a replacement for public equities.