Canada’s CDPQ, Allianz invest in Kedaara Capital’s $750 million fund

Mumbai: Private equity (PE) firm Kedaara Capital Advisors Ltd, co-founded by PE veteran Manish Kejriwal, has hit its hard cap of $750 million for its second fund, two people aware of the development said.

The PE firm was initially planning to raise around $600-650 million for its second fund, Mint reported first in November 2016.

Kedaara was founded in 2011 by former Temasek Holdings Pte India head Kejriwal, along with Sunish Sharma and Nishant Sharma, who were managing director and principal respectively of global PE firm General Atlantic in India.

“Kedaara had started active discussions with limited partners (LPs) for raising its second fund around three to four months ago. They have been able to wrap up the fund-raising quite quickly as there was strong demand to invest in the new fund, and the strong LP interest helped them beat their initial target of $600-650 million,” said one of the two persons cited above, requesting anonymity, as he is not authorized to speak with the media.

There was huge demand from the LPs and the firm had to cut back on some investor commitments in order to not increase the size of the fund, he added. Investors in a private equity or venture capital fund are called LPs.

The firm raised its debut fund with a corpus of $540 million in 2013, in what was then one of the largest fund-raises by an independent, home-grown PE fund.

“While all the existing LPs re-upped in the new fund, the new outing also saw commitments from some new investors,” added this person.

Canadian pension fund Ontario Teachers Pension Plan anchored the vehicle and was joined by other sovereign wealth funds, pension funds, family offices, fund of funds and endowments. The second fund has seen new investors such as Canadian pension fund CDPQ and insurance major Allianz, while Ontario Teachers again participated in the fund, the first person cited above said.

Spokespersons of Kedaara Capital and Allianz declined to comment, while an email sent to CDPQ (Caisse de dépôt et placement du Québec) and Ontario Teachers Pension Plan remained unanswered until press time.

According to the second person mentioned above, the fund-raising witnessed strong demand due to the exit track record demonstrated by Kedaara.

“They have already seen some very profitable exits from a 2014 vintage fund. Exits have been a perennial problem for LPs investing in India and thus, track record of returning LP capital is one of the most important criteria for an Indian fund manager today. With exits in Bill Forge, AU Small Finance Bank and now Mahindra Logistics, which is in the pipeline, Kedaara scores big on the exit front,” he said.

In September, automotive components supplier Mahindra CIE Automotive, a joint venture between Mahindra Group and CIE of Spain, agreed to acquire a 100% stake in Bengaluru-based machine components manufacturer Bill Forge, for about $200 million.

Kedaara, which acquired 50% stake in Bill Forge last year for around $48 million, exited completely through the deal. In June, it exited Au Financiers Ltd, a retail non-banking financial services company and one of the 10 firms to receive in-principle approval to start a small finance bank.

In May, Mint reported that Kedaara had managed to generate a 75% IRR (internal rate of return) in Au Financiers exit and about 55% IRR in its Bill Forge exit.

Another Kedaara portfolio firm Mahindra Logistics has filed the draft prospectus for its initial public offering (IPO). The company is expected to launch its IPO before end of the calendar year.

The firm’s first investment was Rs200 crore in Mahindra Logistics Ltd in April 2014. According to the draft prospectus, Kedaara is looking to sell around 59% of its stake through the IPO. The PE firm holds a 23.25% stake in Mahindra Logistics.