Mumbai: Lighthouse, a consumer-focused mid-market private equity (PE) firm, on Wednesday said it had received a commitment of $25 million for its third PE fund — Lighthouse India Fund — from CDC Group plc, a development finance institution owned by the UK Government.
Lighthouse has backed marquee consumer-centric brands such as ethnic snack food player Bikaji Foods, luxury premium ayurvedic personal care brand Kama Ayurveda, ethnic lifestyle brand FabIndia and leading sanitaryware brand Cera. Other portfolio companies of Lighthouse include laminates maker Stylam Industries, QSR chain Wow! Momo and value retailer V2 Retail.
The PE, which plans to raise around $200 million for the third fund, had achieved a first close of $150 million in March. In December 2017, the firm had announced that its third fund had received commitment of $20 million from International Finance Corp, the private investment arm of the World Bank group. Other investors in the fund include institutional investors and global family offices.
Lighthouse raised its first fund of $100 million in 2009, followed by a second fund with a corpus of $135 million. The firm 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," according to Lighthouse co-founder Mukund Krishnaswami.
CDC, one of the largest institutional investors in Indian PE funds, has committed over $1.7 billion to Indian funds since 2004. For CDC, the investment in Lighthouse fund is an opportunity to back small and mid-sized businesses, which find it difficult to access capital.
“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 work with Lighthouse to play a part in bridging this financing gap" according to Alagappan Murugappan, managing director and head of Asia Funds at CDC.
From its third fund, Lighthouse has so far closed four investments.
On 5 December, Mint reported that Lighthouse was investing over ₹ 50 crore in Aqualite Industries, a footwear company. In November, the PE fund invested ₹ 60 crore in Duroflex, a mattress brand in south India. Lighthouse, in September, invested ₹ 113 crore in Nykaa, a beauty retailer, while in June, it invested ₹ 83 crore in Tynor Orthotics, a orthotic soft goods brand.