CX Partners: Navigating India's Mid-Market

CX Partners: Navigating India's Mid-Market with Control-Orientation and Operational Edge

CX Partners, an India-focused private equity firm founded in 2008 by Ajay Relan and Jayanta Basu, has carved a niche in the Indian mid-market through its distinctive control-oriented investment strategy. With a focus on high-growth sectors such as financial services, healthcare, consumer products, and technology, CX Partners actively partners with management teams to drive operational improvements and foster sustainable growth. The firm, which raised a $500 million maiden fund and a $400 million target for its second fund, leverages its deep sector expertise and hands-on approach to transform businesses. Its track record of 33 successful exits, including marquee names like Sapphire Foods and Thyrocare Technologies, underscores its ability to generate compelling returns and shape industry leaders in India's dynamic economic landscape.

I. Firm Overview & Strategy

CX Partners, founded in 2008 by Ajay Relan (a pioneer in Indian private equity) and Jayanta Basu, is an India-based private equity firm. Headquartered in New Delhi, the firm primarily focuses on mid-market equity investments, aiming to create value in high-quality, scalable businesses. CX Partners was among the few PE firms that managed to raise capital in the tough aftermath of the 2008 global financial crisis, demonstrating its resilience and investor confidence.

A. Global & Regional Presence: CX Partners is deeply rooted in the Indian market, with its primary operations and investment focus explicitly on India. The firm operates from its New Delhi office and emphasizes local expertise and a hands-on approach to its portfolio companies. While it attracts capital from global limited partners (LPs) like British International Investment (BII), its investment thesis is designed for the Indian context, prioritizing sectors that facilitate development and need its capital the most.

B. Investment Philosophy & Strategy: CX Partners' investment philosophy is characterized by a "significant minority and control deals" approach, often seeking to acquire controlling stakes depending on the opportunity. This active ownership model allows them to closely collaborate with management teams to drive business transformation. The firm aims to "invest and create value in high quality, scalable businesses" while balancing entrepreneurial spirit with prudent management.

Key aspects of their strategy include:

• Investment Focus: CX Partners concentrates on sectors exhibiting strong growth potential in India, contributing towards Sustainable Development Goals:
• Financial Services: A consistent and strong focus, with investments in banking (e.g., Ujjivan Small Finance Bank, South Indian Bank, Karur Vysya Bank) and specialized finance (e.g., Indifi Technologies, Ummeed Housing Finance).
• Healthcare: A growing and critical sector, with investments in clinical research (Veeda Clinical Research), diagnostics (Thyrocare Technologies), and hospital services (Sabine Hospital & Research Centre). As Vivek Chhachhi, Managing Partner at CX Partners, noted in June 2024 regarding Sabine Hospital, "We see potential in further expanding Sabine Hospitals to adjacent markets, drawing upon our experience in healthcare investments, attracting high-quality professional leadership, and implementing systems to manage growth."
• Consumer Products & Services: Targeting segments benefiting from India's growing middle-class consumption. This includes investments in food services (Barbeque Nation, Sapphire Foods India, Thalappakatti Hotels) and personal care.
• Technology & Telecoms / Outsourced Services: Investing in technology-enabled businesses and IT/BPO services (e.g., Minacs, BetterPlace, Exotel, Heads).
• Niche Manufacturing/Industrials: Including automotive components (JJG Aero Private Limited).
• Investment Stage: The firm primarily focuses on growth and expansion stage opportunities within the mid-market, encompassing both significant minority and control positions.
• Value Creation Strategy: CX Partners emphasizes a collaborative and hands-on approach to value creation. While specific frameworks are not as detailed as some global peers, their method involves:
• Operational Improvements: Actively working with portfolio companies to improve operating margins and rationalize operations, as seen with Minacs. Jayanta Basu, Managing Partner, stated in 2016 regarding Minacs, "A lot of effort has gone into improving operating margin of the firm by about 500 basis points... We were able to do so because we were in control."
• Strategic Guidance: Guiding companies in market expansion, customer acquisition, and technology adoption.
• Talent & Governance: Attracting high-quality professional leadership and implementing systems to manage growth and ensure robust governance.
• ESG Considerations: British International Investment (BII), an LP in CX Partners Fund II, emphasizes that CX will "invest and create value in high quality, scalable businesses, which provide employment and on-the-job training to a significant number of unskilled and semi-skilled workers," indicating a focus on social impact. The firm also aligns with the Principles for Responsible Investment (PRI).

C. Fund Structure & Capital Sources: CX Partners has raised multiple sector-agnostic funds. Its maiden fund, CX Partners Fund I (2009 vintage), raised $515 million. The firm then launched CX Partners Fund II (2018 vintage), targeting a corpus of $400 million, with a first close of $250 million. These funds typically attract capital from both domestic and international institutional investors, including development finance institutions like British International Investment (BII).

II. Investment Activity & Portfolio

A. Deal Volume & Value: CX Partners has made over 50 investments since its inception and currently holds a portfolio of around 15-28 active companies. Its investment pace has been consistent, reflecting its long-term commitment to the Indian market.

B. Key Investments (Examples):

• Sapphire Foods India Limited: A significant investment in the QSR space, operating KFC, Pizza Hut, and Taco Bell franchises in India, Sri Lanka, and the Maldives. CX Partners co-invested with Samara Capital and Goldman Sachs in this consolidation play.
• Thyrocare Technologies Ltd: An early and highly successful investment in the diagnostics sector.
• Ujjivan Small Finance Bank Limited (formerly Ujjivan Financial Services): A key investment in the microfinance and small finance banking sector.
• Minacs Ltd: A BPO firm acquired in a buyout with Capital Square Partners.
• Sabine Hospital & Research Centre Pvt. Ltd.: A recent (June 2024) controlling stake acquisition in an infertility treatment and mother and child care provider in Kerala, as part of a $50 million funding round.
• Indifi Technologies Pvt. Ltd.: An investment in a financial services technology company.
• BetterPlace Safety Solutions Private Limited: An investment in the technology and telecoms sector (September 2021).
• Thalappakatti Hotels: An investment in the restaurant sector (October 2019).

C. Portfolio Diversity: CX Partners' portfolio is diversified across resilient sectors that benefit from India's domestic consumption, healthcare needs, financial inclusion, and digital transformation. This strategic diversification helps mitigate risk and tap into various growth drivers.

D. Co-investments: CX Partners frequently co-invests, particularly in larger or complex transactions. Notable co-investors include Samara Capital and Goldman Sachs (Sapphire Foods), Capital Square Partners (Minacs), British International Investment, and other PE firms and family offices (Sabine Hospital).

III. Exits & Returns

CX Partners has a strong track record of successful exits, demonstrating its ability to monetize investments effectively and deliver compelling returns to its limited partners. The firm has completed 33 exits to date.

A. Exit Volume & Value: The firm has been active in exit mode, particularly from its first fund. India's exit market, driven by IPOs and secondary sales, has provided favorable avenues for CX Partners to realize value.

B. Key Exits (Examples):

• Sapphire Foods India Limited: Exited in November 2021, generating significant returns.
• Thyrocare Technologies Ltd: A highly successful partial exit through its IPO in 2016. CX Partners' initial investment saw about three times return in about six years.
• Minacs Ltd: Exited in 2016 when it was sold to Synnex Corp. for $420 million. CX Partners anticipated significant returns from this deal, having improved operating margins.
• Security and Intelligence Services (India) Ltd (SIS): A partial exit through its IPO in August 2017.
• Barbeque Nation Hospitality Ltd: A restaurant chain that was also set for an IPO, allowing for a partial exit.
• Agarwal Packers and Movers: Exited in February 2021 via a secondary transaction.

C. Return Profile (IRR & MOIC): While comprehensive IRR and MOIC figures for all exits are not publicly disclosed, the reported "three times return in about six years" for Thyrocare Technologies and the anticipated significant returns from Minacs highlight strong performance. The firm aims to "showcase a healthy return track record before we launch our next fund," indicating a focus on delivering attractive returns.

D. Exit Strategies: CX Partners employs a mix of exit strategies, primarily leveraging public market opportunities (IPOs and block trades) for its listed portfolio companies. They also engage in strategic sales to corporate buyers and secondary transactions with other private equity firms.

IV. Operational & Value Creation Capabilities

A. India Team & Expertise: CX Partners has a "seasoned and cohesive team" with deep sector expertise, comprising 19 members including 9 partners. Key leaders include Jayanta Basu (Managing Partner), who took over day-to-day operations in 2015 from Ajay Relan, and Vivek Chhachhi (Managing Partner). The team's extensive backgrounds in investment banking and advisory roles, coupled with their focus on specific sectors, provide strong domain knowledge.

B. Operational Support & Governance: The firm prides itself on its hands-on operational engagement, particularly in control or significant minority deals. This includes:

• Active Involvement: Bringing in "great thinkers" and challenging management's thinking, as noted by an executive from Genpact (a firm Ajay Relan had invested in during his CVCI days).
• Performance Improvement: Focusing on enhancing operating margins, rationalizing clientele, and optimizing business processes.
• Leadership & Systems: Attracting high-quality professional leadership and implementing robust systems to manage growth.
• Responsible Investing: Aligning with Principles for Responsible Investment (PRI) and emphasizing environmental and social considerations.

C. Network & Ecosystem: CX Partners leverages its robust network within the Indian business community and with global LPs. This network facilitates deal sourcing, co-investment opportunities, and access to talent and strategic resources for its portfolio companies.

V. Market Perception & Reputation

A. Industry Standing: CX Partners is well-regarded in the Indian private equity landscape as a credible and fair partner for entrepreneurs. Its disciplined investment approach and strong track record have earned it a reputation for consistent performance in the mid-market segment. Ajay Relan, a co-founder, was widely recognized as a "doyen of Indian private equity."

B. ESG (Environmental, Social, Governance) Integration: CX Partners' commitment to responsible investing is evidenced by its alignment with PRI principles and its focus on funding businesses that create employment and provide training for unskilled and semi-skilled workers. BII's investment in CX Partners Fund II explicitly highlights their focus on "impact information" and responsible investing.

C. Challenges & Criticisms: Early on, the firm wound up a smaller mezzanine debt fund due to a "lack of investor interest," demonstrating adaptability and a pivot back to its core private equity strategy. Like all PE firms, it navigates the competitive Indian market and seeks to maintain its value proposition amidst evolving valuations.

VI. Competitive Landscape & Differentiators

A. Competitive Positioning: CX Partners differentiates itself in the Indian market through:

• Control-Oriented Mid-Market Focus: A clear strategy to acquire significant or controlling stakes, allowing for deep operational engagement.
• Hands-on Value Creation: A proven track record of actively working with management teams to improve operations and drive growth.
• Sector Expertise: Strong domain knowledge in its core sectors (financial services, healthcare, consumer, technology).
• Founding Leadership: The long-standing experience and reputation of its founders and managing partners in Indian private equity.
• Consistent Returns: A demonstrated ability to deliver healthy returns and provide liquidity to LPs.

B. Future Outlook: CX Partners remains committed to the Indian mid-market, seeing continued opportunities in its focus sectors. Its disciplined approach to deal sourcing, coupled with its operational value-add, positions it well to capitalize on India's sustained economic growth and the increasing demand for private capital in scalable businesses. The firm will continue to prioritize exits to demonstrate healthy returns for its new funds.

VII. Overall Assessment

A. Key Strengths: CX Partners' primary strengths in India include its distinct control-oriented investment strategy within the mid-market, its deep operational engagement capabilities, and its disciplined focus on high-growth sectors. The firm's ability to drive significant improvements in portfolio companies, leading to successful exits and robust returns (including multi-baggers), is a testament to its value creation model. The stability and experience of its leadership team further enhance its competitive position.

B. Key Weaknesses/Areas for Improvement: In a rapidly evolving market, CX Partners will need to continue adapting its deal sourcing strategies to identify attractive opportunities amidst increasing competition and elevated valuations. Further scaling its team and resources to deepen operational support across a growing portfolio will also be an ongoing focus.

C. Overall Impact & Success in India: CX Partners has successfully established itself as a leading and highly respected homegrown private equity firm in India. By focusing on control-oriented investments and a hands-on operational approach, it has not only generated significant financial returns for its investors but has also played a crucial role in transforming and scaling numerous Indian mid-market enterprises. The firm's commitment to building sustainable businesses and its consistent track record solidify its position as a key enabler and a transformative force in India's private equity landscape.

Reflection

CX Partners' journey in the Indian private equity ecosystem is a compelling case study of a homegrown firm carving out a distinctive and successful niche. Founded by seasoned veterans like Ajay Relan, who was aptly called a "doyen of Indian private equity," the firm's strategic decision to focus on control or significant minority investments in the mid-market has been a powerful differentiator. In a market often characterized by passive growth equity, CX Partners' willingness to roll up its sleeves and get operationally involved speaks volumes about its commitment to driving fundamental business transformation. As Jayanta Basu noted regarding Minacs, their ability to "bring down excesses and rationalise our clientele" was directly enabled by being "in control."

Their early and successful bets on companies like Thyrocare Technologies, yielding "three times return in about six years," established a strong foundation and demonstrated their acumen in identifying and nurturing high-growth assets. The diversification across essential sectors like financial services, healthcare, and consumption-driven businesses, coupled with their expertise in consolidating fragmented industries (like the QSR space with Sapphire Foods), showcases a thoughtful and scalable investment thesis.

The firm's hands-on approach to value creation, emphasizing operational improvements and strategic guidance, is critical for the often resource-constrained mid-market companies in India. This active partnership, rather than just capital infusion, helps businesses professionalize, expand, and prepare for future growth or exits. The consistent track record of 33 exits, including several marquee names, further validates their investment and value creation model.

CX Partners' long-standing presence, coupled with the deep local expertise of its team and its adherence to responsible investment principles (as evidenced by its PRI alignment and BII partnership), positions it as a highly credible and impactful player. While the Indian PE market continues to evolve and competition intensifies, CX Partners' disciplined focus, operational depth, and proven ability to generate returns will undoubtedly ensure its continued prominence in shaping India's mid-market champions. Their success story stands as a beacon for other homegrown private equity firms aiming to make a significant and sustainable impact.

References:

• CX Partners Official Website. (Accessed June 7, 2025). About Us, Team, Portfolio.
• British International Investment (BII). (Accessed June 7, 2025). CX Partners Fund II - Investment 01.
• PitchBook. (Accessed June 7, 2025). CX Partners investment portfolio, CX Partners Fund I: Performance, CX Partners Fund II: Performance.
• Mint. (2017, November 23). CX Partners raises $250 million in first close of new fund.
• Mint. (2021, October 2). Ajay Relan, doyen of Indian private equity, no more.
• VCCircle. (2025, May 29). CX Partners - 2025 Investor Profile & Team.
• VCCircle. (2025, June 11). CX Partners-led consortium acquires controlling stake in infertility treatment firm.
• VCCircle. (2017, February 13). CX Partners winds up structured credit business.
• Business Standard. (2016, March 9). CX Partners turns focus on exits.
• Times of India. (2014, January 31). CX Partners backs Minacs BPO buyout.
• Inc42. (Accessed June 7, 2025). CX Partners - A Private Equity Firm Based Out Of New Delhi.