Pegasus Trust AIF I

India's Manufacturing Sector

Driven by a rapidly changing world order and the strategic imperative to diversify global supply chains, India manufacturing provides multiple levers of growth. A confluence of powerful macro tailwinds: a new wave of Free Trade Agreements (FTAs) and Bilateral Trade Agreements (BTAs) expanding our global market access, and the sustained depreciation of the Indian Rupee against the Chinese RMB, which significantly enhances our export competitiveness. Furthermore, as Artificial Intelligence drives extreme efficiencies within India's traditional IT Services sector, a vast pool of high-quality engineering talent is being unlocked and redirected toward core industrial, aerospace, and precision engineering sectors.

Global Energy Transition & Data Centres

The worldwide pivot toward sustainable power and power intensive Data Centres represents one of the most capital-intensive megatrends of our time. Rather than speculating on utilities or green energy providers, our strategy centres on the critical components and technological providers enabling this shift. Furthermore, the advancement of next-generation nuclear power – particularly the development of Small Modular Reactors (SMRs) and innovations within the thorium fuel cycle – presents generational opportunities. The global manufacturing landscape is undergoing a seismic realignment.

China's Anti-Involution

China has begun unwinding 'Neijuan' or involution. For decades, relentless price wars and excess capacity acted as a global deflation engine. That phase is ending. Beijing is now prioritising profitability, wage stability, and quality of growth through hard supply side reforms. The next cycle favours efficient Indian domestic manufacturers that survived the China onslaught, built resilience, and can now compete on a more balanced playing field.

India's Strategic Autonomy

Supply chains are no longer optimised for cost alone — they are being re-optimised for control. Export licensing on critical minerals, chokepoints in advanced chips, and the weaponisation of energy and defence supply lines have turned self-reliance from a slogan into a balance-sheet consideration for entire nations. India's response is a multi-decade, policy-backed capital expenditure cycle across energy, defence, materials and electronics, funded through production-linked incentives, sovereign order books and long-dated offtake agreements. Our interest is not in the headline end-product but in the industrial supply chain that has to be built to deliver it — businesses with existing cash flows, visible order books and the engineering credibility to win the work. We underwrite proven operators, not policy announcements.

Energy Security — Coal Gasification & Nuclear

The domestic mirror of the global energy transition: not what India supplies to the world's build-out, but what it must build to stop importing. India holds some of the world's largest coal reserves while importing the bulk of its natural gas, methanol and ammonia. Coal gasification converts a stranded domestic resource into import-substituting chemical feedstock, backed by government incentives and captive block allocations. In parallel, the opening of nuclear generation to private capital — alongside small modular reactors and the thorium fuel cycle India has invested in for four decades — converts a state monopoly into an investable value chain spanning heavy forging, pressure vessels, instrumentation, controls and fuel handling.

Defence

Three structural changes are occurring simultaneously: an indigenisation mandate steadily removing items from the import list, a defence budget compounding faster than nominal GDP, and a genuine export order book forming for the first time. The opportunity sits less with platform primes and more in the private Tier-1 and Tier-2 ecosystem — precision machined components, propulsion and actuation, electronic warfare and avionics, munitions and energetics. These are order-book businesses with multi-year revenue visibility and sovereign counterparties, where operating leverage arrives as volumes build.

Rare Earths & Critical Minerals

Rare earths are not rare; processing them is. China controls the overwhelming majority of global separation and magnet-making capacity and has shown a willingness to use export licensing as leverage. Almost every theme we track — electric mobility, wind, defence, electronics, automation — runs through permanent magnets and a handful of processed inputs. India's response spans its critical minerals mission, overseas and offshore resource acquisition, domestic magnet manufacturing incentives and recycling. The industry here is early and small relative to the prize, and we size positions accordingly — underwritten for optionality, not as a core earnings engine.

Semiconductors

India is unlikely to win at leading-edge logic, and we do not underwrite that it will. The realistic prize is assembly, testing and packaging, mature-node capacity serving automotive, power and industrial demand, compound semiconductors, and the equipment, speciality chemicals, gases and ultra-pure infrastructure that every fabrication plant consumes regardless of node. That is where our capital goes: the suppliers to the build-out, whose economics are visible in advance and whose demand does not depend on any single project staying on schedule.