Beacon India Private Equity Fund started investing in July after entering India’s underserved $5-25 million (about Rs20-100 crore) deal segment one year ago.
Beacon, which is sponsored by financial services firm Baer Capital Partners (UK) Ltd, has made two investments totalling $27 million and is about to close $32 million more from an initial corpus of more than $100 million.
The firm is looking to raise another $100-150 million towards the end of the year that would be deployed over three years.
Beacon’s strategy of doing smaller private equity (PE) deals is similar to others who also saw a gap in supply for established companies that needed less than $25 million. New Delhi-based Avigo Capital Partners does deal sizes of $3-$10 million.
SAIF Partners is an example of a firm that serves smaller deal sizes within a range of $10-100 million.
Deepak Shahdadpuri, managing director of Beacon India Advisors Pvt. Ltd, said they are also looking at a few deals between $1 million and $3 million. Similar to a venture capital (VC) investor, they are looking to invest in “the next big trend,” Shahdadpuri said, and are banking on finding proprietary deals.
But they only back proven business models, which differentiates them from the VCs doing similar deal sizes.
The fund heads, Shahdadpuri in Mumbai and Rajeev Thakore in New Delhi, have chosen this investment strategy for a reason.
Shahdadpuri had been the first to invest in Nashik-based wine maker Sula Vineyards (Nashik Vintners Pvt. Ltd) and Mumbai-based art auction company Saffron Art Pvt. Ltd in early 2005.
Thakore had invested in engineering and construction company, Punj Lloyd Ltd, and in telecom giant, then called Bharti Tele-Ventures Ltd, that now is Bharti Airtel Ltd six months before Warburg Pincus India Pvt. Ltd.
The history of these two investors brings together Beacon’s main, broad themes— consumer-driven businesses and infrastructure.
Specifically, they are looking at niche segments such as media outside of cinema and print, on-line advertising, offshoring of music production for advertisements, distribution of non-banking products, irrigation, and food services.
But Beacon also is looking at more established PE investment sectors such as manufacturing, construction and power.
Beacon’s most recent investment was an engineering, procurement and construction company, A2Z Maintenance & Engineering Services Pvt. Ltd.
Beacon’s other closed and pending investments include an art auction company, software technology and real estate development.
For the latter investment, Beacon will co-invest with its own limited partners—a strategy that is employed abroad more often.
Beacon will put in $20 million, and raise the remaining $80 million mostly from investors.
In India, ‘co-investment’ more often refers to different funds contributing to the same deal.
The fund’s investors, including Michael Hintze of London-based hedge fund CQS, and Dubai Ventures, the investment arm of Dubai Holding, also are major investors of the larger group, Baer Capital Partners, which launched in 2006 and is headquartered in Dubai.
Baer also has plans for $1 billion in investment funds for a hedge fund, market-benchmarked fund and an infrastructure fund.
Alok Sama, Bear Capital Partners’ founder and president, said the firm also is looking at sector-specific funds, and getting into private banking and wealth management.
PTI contributed to this story.