Arshad Zakaria, the ex-head of global markets at Merrill Lynch, is to launch a private equity fund focusing on India, say people familiar with the banker's plans.

Zakaria left Merrill Lynch in December, the casualty of a struggle between his mentor Tom Patrick and Stan O'Neill, chairman and chief executive of the bank.

The Indian-born and United States-educated Zakaria's future has been the focus of speculation not least because he had been tipped as a future president of the Wall Street bank.

Now it has emerged that Mr Zakaria is turning his back on Wall Street for India, one of the world's fastest-growing economies and among the hottest emerging market destinations in the past year.

Investors, including many funds new to India, have turned to India in strength in the past year, delivering record portfolio flows and private-equity investments.

People familiar with Mr Zakaria's plans say he will continue to be based in the US from where he will manage his proposed fund, which is likely to focus on India's growing private equity opportunities in healthcare, technology and pharmaceuticals.

Bankers say the trend is gathering strength as US and other private equity funds come under more pressure to step up their India presence, particularly to "tap mezzanine (mid-tier) opportunities".

"[Mr Zakaria] is doing what everyone else is doing," said a person familiar with his plans.