New Delhi, Sept. 18 -- Asset quality and the management team are essential metrics when investing in a financial services company, Mukesh Mehta, chief investment officer and senior managing director at Blackstone, said at the VCCircle Finserv Investment Summit 2026.
"Unlike other businesses where cash flow is generated from operations, financial services involve money. So issues may show up only after two-three years of lending," he said. "I put the management team even above asset quality (while investing in financial services companies) because that determines competitiveness. These are the only areas where investors could possibly go wrong," Mehta added.
Blackstone managed $1.3 trillion in assets under management as of June 30. The alternative asset manager's private equity investments in the financial services segment include ACE Insurance Brokers and Aadhar Housing Finance.
In late 2025, the firm inked a deal to acquire a 9.9% stake in Federal Bank.
"Federal Bank has a 90-year-old legacy and is a leading player in the South Indian market. We saw a great business and a stellar deposit franchise. Our primary capital will just accelerate the growth of the company," Mehta said, speaking about the investment in Federal Bank.
Broadly, Mehta said India's financial services sector in India is characterised by high growth, strong return on equity and stable asset quality, especially in retail lending. These factors make India "a great destination" for financial services, he said.
"Both information technology and financial services account for nearly 70-80% of gains of Indian private equity. People are drawn to the financial services sector because it is a multiplier of nominal GDP growth," Mehta said.
Published by HT Digital Content Services with permission from VC Circle.