Consumer-focused, mid-market private equity (PE) firm Lighthouse Ventures on Wednesday said it has received a commitment of $25 million for its third fund from CDC Group plc, a development finance institution owned by the UK government.

Lighthouse has backed several marquee brands such as ethnic snack food maker Bikaji Foods, premium ayurvedic personal care brand Kama Ayurveda, ethnic lifestyle brand FabIndia and leading sanitaryware brand Cera. Its other portfolio companies include laminates maker Stylam Industries, quick service restaurant chain Wow! Momo and value retailer V2 Retail.

The Lighthouse India Fund III is aiming at a corpus of $200 million. It had achieved its first close at $150 million in March. In December 2017, the PE firm had said that the third fund had received commitments of $20 million from International Finance Corp. (IFC), the private investment arm of the World Bank group. Other investors in the fund include institutional investors and global family offices.

Lighthouse had raised $100 million for its first fund in 2009, followed by a $135 million second fund. It has invested in 17 companies since then.

“CDC brings decades of experience working in emerging markets and in India particularly. We look forward to their partnership and guidance as we continue to back entrepreneurs building long-term, sustainable businesses," said Lighthouse co-founder Mukund Krishnaswami.

CDC is one of the largest institutional investors in Indian PE funds with commitments of over $1.7 billion since 2004, the statement said. The investment in Lighthouse fund is an opportunity to back small- and mid-sized businesses.

“This investment enables CDC to get our capital into family-backed, small-to-midcap businesses in job creating sectors. As India transitions from developing to developed economy, SMEs will play an increasingly important role but they will need more investment than ever. Historically, this segment of the Indian market has seen a widening gap between the supply and demand of capital. We’re pleased to be working alongside Lighthouse to play a part in bridging this financing gap," said Alagappan Murugappan, managing director and head of Asia Funds, CDC.

From its third fund, Lighthouse has so far closed four investments.

On 5 December, Mint reported that Lighthouse has invested over 250 crore in footwear company Aqualite Industries.

In November, it backed mattress brand Duroflex with 160 crore. In September, it pumped in 113 crore in beauty retailer Nykaa, while in June, it invested 83 crore in Tynor Orthotics, a orthotic soft goods brand.

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