"Most excited about industrials & traditional manufacturing in India for our investments": Anuj Ranjan, CEO Brookfield PE

Brookfield Private Equity CEO Anuj Ranjan states the era of easy money is over, emphasizing operational improvements for business resilience and returns. He highlights digitalization, AI's industrial applications, and de-globalization as key investment themes, with significant opportunities emerging in India's industrial and manufacturing sectors.

Days of free revenue growth of portfolio companies, free multiple expansion and free money is over. The primary task of private equity fund managers is to operationally improve businesses to make them more resilient and generate returns, feels Anuj Ranjan, CEO, Brookfield Private Equity Group. In 2001, Brookfield launched its first buyout fund, shifting away from being mainly an asset owner and operator to also overseeing vast sums of money for private-market investors. In a broad ranging interview he talks about global trends to the new opportunities in India. Edited excerpts:

Q: What themes are shaping your investment outlook across asset classes as you look ahead to 2026?
Ans: There's been two big things that we've been observing for a while but have accelerated in the last few years. Firstly, it's digitalization. When you now look at the impact of AI, we truly are in the fourth industrial revolution. The key word there is industrial. $7 trillion investment has gone into infrastructure alone around AI to enable it. And that's for use cases today. The use cases in the future could be even higher. It all requires that the industry sees massive productivity gains and you're actually starting to see those. Two years ago, we all had ChatGPT which we thought was fun to play around with. Now, you're starting to see it in a big way and it's out there publicly that tech giants are able to do a lot more, generate a lot more revenue without additional cost. So there's a real operating lever if you can utilize it.

We think one of the best applications is traditional industrial or manufacturing businesses. These are businesses that often have not yet done even the basics of digitization. It's all analogue. And then you apply AI suddenly, and you can reorient your plant equipment to get higher throughput. That design is provided by AI. Suddenly you get dynamic pricing real-time for all of your customers, which then results in additional revenue. We've always had automation but automation that is AI enabled is going to transform some of these businesses. How we think about AI is less about the technology and more about its applications and supporting its development through infrastructure. We've done this in Qatar, France and Sweden. We've been able to put real money to work and plan to invest significant amounts of capital to enable AI infrastructure. This isn't just data centers, but everything surrounding the supply chain that is needed to ultimately provide this compute.

From a private equity perspective, we think about how we can apply this to industrials and manufacturing, which are areas we know really well. And then there's the utilisation of AI in our own business. We now have over $ 1trillion of AUM, hundreds of portfolio companies around the world and we have a vast amount of data.

When you start with a big data lake, that's the best application for AI tools. Being one of the largest infrastructure and real estate players in the world means we can gather great insights and information from AI to inform our investment decisions. This is one big trend that is impacting what we buy, how we invest, how we run the businesses we buy across the board.

The other big trend is de-globalisation. This has been happening since COVID and it's a straight line: if you look at US manufacturing, the investment to build plants or expand plants in 2020 was $50 billion. This year it'll be $250 billion.

Now you see every country in the world reorienting their supply chains and planning to produce more domestically. That's created a massive need for cash from major companies. So, on one hand they're all going to be more productive because of technology but on the other hand they have to spend a lot of money to produce locally and that creates opportunities.

Q: With so much geopolitical uncertainty, how do you make sustainable business plans?
Ans: Trying to figure out what is going to happen is not the right use of time. What makes more sense is to ensure that the businesses we buy are resilient and durable. For example, we couldn't predict what would cause inflation but we've always acquired businesses thinking about the value we're paying and whether they are inflation-protected— meaning can they pass on price increases? Are they price setters or price takers? Do they have significant market share? Are they critical businesses for their customers? When you answer all those honestly, these businesses actually do just fine irrespective of the volatility you see today.

Q: Resilience means extended timelines. Does that mean that the investment horizons are also getting stretched?
Ans: To make real returns today you can't bet on what the industry bet on in the past. There were vast amounts of money flooding the general private equity landscape. It didn't cost very much and there was unlimited growth so you could buy a business, leverage it and with financial engineering get your returns in two or three years. I think those days are gone. I think today you have to operationally improve businesses to make them more resilient and generate returns. You're not going to get free revenue growth, free multiple expansion or free money today. The only way to make strong returns is to go out and really work these assets. It'll be tougher to do that in two to three years. We typically have 5-8 year horizons.

Q: When you said that the era of easy money is over, do you foresee consolidation in the PE industry itself?
Ans: Do I think there will be fewer private equity groups or alternative asset managers in the future? Absolutely. What we're seeing is that investors are choosing fewer managers to partner with globally and that means a handful are becoming bigger. We're on the right side of that trend but it's those that have scale, deep operational capability and boots-on-the-ground knowledge of various markets that are accelerating. Then there are groups that have a specialist focus and they do it really well. Then you have those that are neither here nor there and those are challenged.

Do they get gobbled up? Maybe. Do some of them just start to shift their model and become less relevant? Probably. You'll have many groups that used to raise billion dollar plus funds and aren't raising those funds anymore. It doesn't mean they're out of business, they just become less of a participant in the market over time.

Q: We see the private equity vertical doubling down on the Middle East. Do you see significant opportunities there?
Ans: Brookfield has been in the Middle East since 1997, we started seriously investing there in 2015 . Between 2016 and today we've put $16 billion to work in the region. So it's become a very serious market for us. The interesting thing about the Middle East is you get emerging markets growth with developed market risk.

We genuinely like the market, our experience there is exceptional and that is something special we can provide our LPs. It's a market that most of them want to grow in but they just didn't have the partners to help them.

Another area we're been really excited about is financial infrastructure. That is the asset light financial services that underpins the global economy. We are bullish on payments for example. We have Sir Ron Kalifa, who built WorldPay and is one of the leaders in this space, with us who brings a depth of knowledge, expertise and capability. It's again a space where we feel we have something really unique to offer in an area that is rapidly transforming from analogue to digital to data to AI.

And with the advancements in blockchain and technology, there is a huge opportunity to transform what legacy incumbents were doing in spaces like payments or B2B transfers .

Q: And what about India, a market where you have been very prudent. Are valuations still stretched or do you see fundamental shifts?
Ans: Brookfield, has invested over $30 billion in India. It's one of our biggest growth markets. We're a large foreign investor in the country. Of course, we think there's growth in India and the growth is real. But for us, we are value investors. It doesn't mean paying a low price, it means paying the right value for the amount of growth that we see in the market. And we don't want to invest in sectors or areas that we don't bring anything special to or have no capability in.

If we are the best owner of a business, of course we're happy to pay the highest price. The thing in India is that industrials or real asset linked services, where we are experienced aren't sectors where the private equity activity has been. Over the last decade, in India, most of the private equity activity was in consumer, certain services and technology again. Some of them have been great, but other than having paid higher than someone else we probably wouldn't have been the right owner.

I do think that over the last couple of years, we are starting to find opportunities in industrial companies: some of it is in supply chain, others are around digitalisation. Over the next 10 years, our India business will triple or quadruple and in our private equity business, you will only see us do a lot more in sectors we are comfortable in.

Q: Your exits have been good in India. How do you see the market evolve?
Ans: Today, it's a very deep market. I think India has been a beneficiary of changes over the last 15 years and the country's done a really good job of making itself appealing to global capital. I remember our first ever investment in India came with a lot of questions: if you spent a billion dollars for a business and you wanted to sell it for three billion dollars, there hadn't really been many examples prior to 2010. Today I don't think that's a question.

Q: Do you see Brookfield private equity partner with Indian companies because many of them have cleaned up their balance sheet and now are again hungry to grow and even acquire?
Ans: Broadly for private capital, the future really is partnerships. Wedo this around the world—whether it's governments or whether it's local conglomerates, local companies or even local families. Being that partner of choice isa way for us to put capital to work but also protect ourselves. We are pretty open-minded to bringing partnership capital for companies that need to grow.

Q: We see a lot of geo-focused sector-focused funds from the Brookfield stable. What's the rationale?
Ans : We're not going to be prolific;, we don't want to serve every flavour of ice cream, but where we have really deep capability, and where we know we can do something for our clients is where we will look to do it.

Q: Retail money is coming into private equity in a big way. As a fund manager who has to keep raising money, do you think that's an opportunity that's waiting to be tapped in India?
Ans: It could be an opportunity, because if you look back over 20 years, the number of public companies has dropped dramatically and the number of private companies has increased dramatically. The number of privately held companies that have over a hundred million dollars of EBITDA is up 4x but the number of public companies is down to 30% of what it was before globally. If you look at that trend and also the quality, some of the world's best companies today are private, yet still you cannot access them in the public markets. Why shouldn't individuals have access to this vast high-quality market that is far bigger than the public markets today? And so should individuals go from effectively having nearly 0% of their capital in alternatives to something more? Yes. Will it be the 40-50% that some big institutional investors have? Maybe not. But should they be more than zero? Yes. I think it can be complementary to what we do on the institutional side but in the near to midterm it's not replacing anything at all now in India. In particular I'd say absolutely why shouldn't Indians who have the capability have access to global private markets? They should. I see no reason why the Indian individual investor shouldn't benefit from all the things that we're able to generate around the world in our private business.

Q: Historically in India for private equity, the sweet spot was tech services and export focused sectors like pharma. In a world where geopolitics and trade tariffs are playing havoc, do PEs need a reset towards sectoral selection?
Ans: We like to look at what we call hourglass businesses. Businesses that have lots of suppliers, customers, and where very few other businesses can do what they do. We think these are amazing businesses, irrespective of where they are in the world, and India is no exception.

Q: You talked about partnership capital. Would you be insistent on the fact that in India to make money, you need to be the controlling shareholder and do buyouts, or you're open to take a, you know, significant minority or be a junior partner and be a more a capital provider?
Ans: We're open. What's important to us is the right partner and whether we are aligned on the vision for the business. We want the right governance not only to protect ourselves and our investors, but to ensure that our voice, knowledge, and expertise can be brought to bear in the company. So we want to make sure we have the right governance. And obviously, we ultimately need to exit. You need to make sure you're aligned with the partner on that exit. If you have alignment on those three things, then I think you can absolutely do significant minority type investments.

Q: What about things like venture or secondaries? As a private equity piece, would you like to dabble into that as well?
Ans: I always think, what are we providing to our clients that is better than what others can provide ? We don't want to just launch another venture strategy for the sake of it. That isn't our objective. What can we do better than anyone else? The interesting thing that's changed is that never before has technology been so linked or dependent on infrastructure. That has changed dramatically.

Being one of the world's largest private owners of infrastructure means that we can have access to and conversations with both large and growing technology companies or growing technology companies that are beyond where we could have before. And now there are possibly opportunities for us to provide something for our clients that's unique.

We are not there right now, but our lens is: Can we get access to amazing investments that we feel really good about, where we're bringing something special to the table? I don't want to do deals where the only thing we're bringing is money.

Today, with our infrastructure platform, we're bringing something really special. And so could high growth type opportunities or profitable growth opportunities emerge out of that? Yes.

Q: Wouldn't you lose sleep over not investing in companies with potential when they were young and being unable to invest in them when they realise their potential but by then they have become richly priced?
Ans: Of course, there's always going to be companies that we all wish to have acquired at a very low valuation. But, it's more about the judgement of the risk return. For every one company that starts at a $10 million valuation and becomes a trillion dollar company, there are thousands more that didn't get there. We have no special crystal ball that will tell us which one is going to end up where. And so I don't think it's the right place for us. The way we judge risk return at that earliest stage is: are we bringing something special to the table? Do we have some kind of an infrastructure angle? Or do we have something else that we can do with the business that allows us to get access to it early? That could be really exciting.

But we always have been at heart value investors who really like cash flow. Cash flow never goes out of fashion. And it means sometimes you miss the 1000 times multiples of capital in high growth venture investments.

But on balance, our track record, overall, has been exceptional. And so we're going to stick to what we know and what we do really well.

Q: Within the spaces that you said, and for private equity in India, are there some sweet spots that are emerging that really excites you in India where you want to put money in the 2-3 years?
Ans: First off, Brookfield in India could be $100 billion in the next 5 years from the over $30 billion it is today. It can be much bigger, we have real knowledge, real capability, real confidence in the market, our team and in what we've done already. Private equity should be a big part of that growth to $100 billion.

I'm most excited about industrials and traditional manufacturing in India for our PE investments. I think that it's overlooked and maybe a bit undeservingly unloved. There's a lot of opportunity to transform these businesses. And you can make those transformations today faster than you could in the past, because of where we are with technology.

They don't need to only be export driven. And there are opportunities to improve the operations when you can bring in the capabilities we have globally in this space to run those businesses better. And I'd say the people who own those businesses today are much more open to partnership. The next decade is going to be pretty exciting around that space.

Q: Semiconductors and AI and batteries are the two big missions for the Indian government. Are you keen to play that both from the PE pool as well as the firm?
Absolutely. I mean, if you look at it, data centres, for sure. But also the broader supply chain. And that could be the industries that form that supply chain. Globally, we own the world's largest manufacturer of low voltage energy storage and batteries. There are opportunities in that space in India today as well. And those opportunities aren't getting the valuation premiums that we've seen in other consumer, services or tech services type spaces. So, we're excited.

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Source: EconomicTimes
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