Mumbai: Private equity (PE) firm Mandala Capital is preparing to raise $300 million for its third fund, a top official said. The new fund will invest in businesses across India and South-East Asia, unlike the previous two funds that were focused on India.

“Nearly 65% of the second fund has been invested. The PE firm is likely to close two more deals before launching its third fund," said Uday Garg, managing partner, Mandala Capital.

The Mauritius-based fund invests in agribusinesses, besides food and food-related consumer products. Some of its portfolio companies in India include supply-chain solutions provider Gati Kausar India Ltd, Asia’s largest manufacturer of drip irrigation components Jain Irrigation Systems Ltd and its agri-food subsidiary Agri Farm Fresh Foods and sugar, chemicals and biofuel producer Godavari Biorefineries Ltd.

“The new fund will invest in firms across India and South-East Asia. There are plenty of similarities in the businesses and environments they operate in. Hence, if required consolidation, sharing of technical know-how and leveraging of customer base opportunities can be explored within the portfolio firms," said Garg.

Garg said the fund may be launched in the first half of the next fiscal after the PE firm makes a few exits from its second fund. So far, the limited partners (LPs) or investors in Mandala Capital have primarily been in the US. “For the new fund we will be looking at geographical diversification of our investor base."

Some of the firm’s investors include Teachers Insurance and Annuity Association (TIAA), UTIMCO—the external investment corporation of the University of Texas and Berkeley Endowment Management Company (Bemco), among others. Garg said Mandala will also reach out to its current investors for rasing the new fund.

Mint had reported on 6 August that Mandala was looking to exit its investment in Jain Farm Fresh Foods by the first half of the next fiscal year through the initial public offering route. In March 2016, Mandala Capital had invested 402 crore in Jain Farm Fresh and is expecting to clock 2.5x returns on its exit. Garg declined to comment on specific exits and IPO plans for its portfolio companies, but said that it plans on 3-4 exits in the next 12 months. The fund will mostly focus on minority deals.

“Agri-business is a vast sector and is not limited to B2C businesses alone. We feel confident about investing in firms that form the backbone for the front-end. It allows for better understanding of the supply chain and the backend linkages as well," said Garg.

The number of alternative investment funds (AIFs) have more than doubled in the past couple of years to about 346 in 2017, according to India Private Equity Report 2018 by Bain and Co. “AIFs have also been a significant contributor to overall fund-raising in the Indian market and have helped raise $5.1 billion in 2017, more than double their 2016 total," the report stated.

In 2017, Asia-Pacific-focused fund-raising levels recovered to 2015 levels of approximately $66 billion, growing by 6.3% from 2016, according to the report. “India was among the leaders of that growth, with India-focused funds growing by 48% to an aggregate $5.7 billion in funds raised. In terms of returns, LPs have been cash-positive since 2013, and the Asia-Pacific private equity industry has been consistently outperforming public markets," the report added.

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