Mumbai: Private equity firm Paragon Partners on Monday announced the completion of fundraising for its maiden private equity fund, Paragon Partners Growth Fund-I, securing commitments of approximately $120 million, the firm said in a statement.
Paragon Partners, founded by Siddharth Parekh and Sumeet Nindrajog, had raised $50 million (around Rs300 crore) in its first close in March 2016. Parekh is the son of Housing Development Finance Corp. chairman Deepak Parekh.
The funds were raised from a diverse mix of domestic and global investors. The fund’s limited partners (investors of a private equity fund) include a large sovereign wealth fund, a development financial institution, funds of funds, insurance companies, family offices and high net-worth investors (HNIs).
“We are very well positioned today to pursue the opportunity we have identified in the mid-market in India," said Siddharth Parekh, co-founder and senior partner at Paragon Partners.
Some of the investors that participated in the fundraising include SIDBI, Fairfax Group, Kotak family office—Infina and a few domestic insurance companies, said Nindrajog, co-founder and senior partner at Paragon Partners.
Around 40% of the fund was raised from offshore investors, with domestic investors contributing the rest, he added.
Paragon Partners focuses on opportunities in core sectors, including consumer discretionary, financial services, infrastructure services, manufacturing and industrials and healthcare services.
“From a macro point of view we think that the next 5-10 years will be a good time for India from a manufacturing point of view. These are cyclical, B2B businesses and they are often misunderstood and investors tend to think that they don’t grow that well. But we think that if you are contrarian, you can pick up very attractive businesses at attractive prices," said Nindrajog. Paragon Partners typically makes investments ranging in the ticket size of $10-15 million per transaction, targeting significant minority ownership stakes.
The fund has already made four investments aggregating approximately $45 million. In September 2017, one of the fund’s early portfolio companies, Capacit’e Infraprojects Ltd, went public in an initial public offering that witnessed an oversubscription of 186 times. Paragon’s other investments include Maini Precision Products Ltd, Cravatex Brands and InCred.
The company expects to close another two-three deals in the next six months, which will see it deploy almost 70% of its capital. Post that, the firm will start looking at starting work on its next fund, said Nindrajog.
“Once we are 70% deployed we can go fundraising, so in the next 6-12 months, we should be looking at beginning fundraising for our second fund," he said.
Nindrajog added that before hitting the road again for raising another fund, the firm will like to return some amount of capital to its investors.
“It is important to show some returns. Capacit’e is doing well. We would want to take some money off the table there, probably in the next six months, depending on the markets," he added.