MUMBAI, March 20 -- Private equity firm ValueQuest is ramping up exposure to banking and financial services in its second fund, betting that balance sheet stress in the sector has eased enough to reopen investment opportunities, a top executive told Mint.

This marks a shift from its first fund, when the firm largely stayed away from the sector due to concerns around balance sheets and asset quality. With credit cycles stabilizing after the post-pandemic stress, it now sees renewed opportunity across lending, wealth management and technology-led financial services.

"We want to also now spend a lot more time on banking and financial services. We didn't find the right opportunity in the last fund deployment cycle," said Pushkar Jauhari, ma...