France-basedNatixis Private Equity has backed the start of Lauris Capital Partners, which will invest $50 million (Rs197 crore) in middle market and small buyouts in India across sectors.
Lauris Capital is likely the only fund dedicated to small buyouts in India, where buyout transactions of any size are limited by promoters, who want to retain control of their companies.
Yet, Hong Kong-based Harsh Sabale, founder and head of Lauris Capital, said, “Promoters see that a smaller stake in a larger company is more valuable than a large stake in a small company.”
Sabale was previously a director with Hong Kong-based private equity fund Navis Capital Partners (Navis Investment Partners (Asia) Ltd), where he did similar deals in India, and saw that the segment was ripe and niche. So, he sought to do a fund dedicated to the space, and closed the latest deal in September with Natixis Private Equity as its sole investor.
Natixis Private Equity is part of Natixis, a corporate bank that is listed on the Paris stock exchange . The bank was created a year ago when two French cooperative banking groups, Banque Populaire Group and the Caisse d’Epargne Group, merged.
Natixis Private Equity’s current commitments are €1.375 billion (Rs7,980 crore). According to a press release, the directors of Natixis Private Equity also are in discussions with another team for India that would specialize in a different segment. The fund also invests in another undisclosed private equity fund in India. Lauris Capital, which recently leased an office in Mumbai, will take a 51% or greater stake in its portfolio companies.
But unlike typical buyouts in more developed markets, such as the US and Europe, the management teams will continue to lead the company.
Sabale said Lauris Capital is for promoters who are looking to grow aggressively, often through acquisitions.
“Those wanting to achieve a five-year growth plan in three years,” Sabale said. “They want to exit with us fully. The ideal is a trade sale.”
The fund will be invested over the next 12 months, starting with a deal expected to close mid-January.