ValueQuest returns to financials on easing balance-sheet stress

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, managing director and fund manager at ValueQuest. “Post-covid, there was a lot of balance sheet stress, asset quality stress.”Advisors tracking the sector said the current environment offers a favourable entry point, with valuations in several financial services segments correcting from earlier peaks.

“The cycle is now in the downturn, so it’s a good time to get entry because the valuations are on the lower end of the spectrum,” said Mohit Agarwal, executive director - tech at Unaprime Investment Advisors.He said financial services is a cyclical business dependent on macro and geopolitical factors, making entry timing critical, especially for private funds targeting IPO-bound companies within a three-to-four-year window. Agarwal added that the sector is entering a recovery phase of the credit cycle, assuming current geopolitical disruptions such as the West Asia crisis remain short term.In its first fund, ValueQuest’s exposure to financial services was limited to tech-led plays like Zaggle and ToneTag.The firm is also sharpening its focus on climate and energy transition, alongside core sectors such as consumption, healthcare and manufacturing.ValueQuest, which has backed firms such as Waaree and Wow! Momo, is targeting a ₹3,000 crore