Mumbai: Home-grown private equity fund manager TVS Capital Funds Pvt. Ltd on Monday said it has made a first close of 832 crore (approx $114 million) for its latest fund TVS Shriram Growth Fund 3. The fund is jointly sponsored by the TVS group and the Shriram group.

TVS Capital Funds is led by Gopal Srinivasan, a third generation entrepreneur from the TVS group and D. Sundaram, former vice-chairman and chief financial officer of Hindustan Unilever Ltd. The sponsors have invested over 200 crore in the fund, a statement from the fund said.

With the first close of its third fund, the total capital raised by TVS Capital has exceeded 2,000 crore, the statement said. TVS Capital raised its first fund of 600 crore in 2009, followed by a second of 600 crore in 2012.

TVS Capital has invested in companies such as National Stock Exchange of India Ltd, Indian Energy Exchange Ltd, RBL Bank Ltd, City Union Bank Ltd, Wonderla Holidays Ltd and Nykaa.com.

The commitments for the first close of the latest fund are entirely from local investors.

“We prefer not to raise capital from foreign investors. We have a harmonious set of family offices and institutional investors who understand India well," said Srinivasan, adding that the firm has raised around 500 crore from family offices and ultra high net-worth individuals (UHNI).

The strong interest from family offices was because of the co-investment programme, which entitles these family offices to invest directly into companies, alongside the fund, said Srinivasan.

“They are very keen on co-investments. They have taken an intent of co-investing 400 crore alongside the fund. Co-investments are becoming important," he said.

The fund is in the final stage of issuing its first term sheet and expects to make its first investment by the year end.

TVS Capital is targeting a final close of around 1,200 crore for the third fund. The firm expects to receive additional commitments of 200 crore from its existing pipeline of clients.

According to Srinivasan, while the latest fund size is larger than its previous funds, the investment strategy will continue to remain the same and the fund will continue to focus on investing in late stage venture and late stage growth opportunities. The fund will also look at control transactions through platforms.

“Our logic is to pretty much stay in the same place. We go from late stage venture to late stage growth. We do control investing in smaller deals, like our investment in Tex Mex chain. We do control investing through platforms. We have done about three companies so far—MedPlus, Dusters and Chillis franchise in south and west. We are seeing a lot of professionals who have just retired or stepped out and want to start from scratch. That is a very common trend now," said Srinivasan.

From a sector perspective, the fund will focus largely on financial services and consumption themes such as food and lifestyle, he said.

“In consumption, we will look at largely food and then lifestyle. We see a large play of disruption because the whole industry is moving from unorganized to organized. So, food is a big area for us," said Srinivasan.

Apart from investments, the firm has also been working on exiting its investments and returning capital to its investors.

TVS Capital Funds’s second fund of 600 crore has almost distributed the entire original capital back to its investors. It’s most recent exit was from Nykaa, a popular online and omnichannel beauty products platform.

“The second fund has been exceptional we expect to give back two times the capital that we raised," said Srinivasan.

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