MUMBAI: Himalaya Wealth Managers has launched a ₹500 crore SME-focused alternative investment fund (AIF) aimed at backing growth-stage businesses in sectors such as deeptech, aerospace, defence, industrial automation, healthcare, electronics and renewable energy, senior executives told Mint.
The Category I AIF, called Himalaya SME Scheme-I and registered with the Securities and Exchange Board of India, has a target corpus of ₹250 crore with an additional ₹250 crore green shoe option. The fund plans to invest in profitable small and medium enterprises seeking expansion capital rather than early-stage venture funding.
The launch comes as institutional investors increasingly look beyond traditional startup bets towards manufacturing-led and deeptech businesses, amid growing government emphasis on domestic production and supply-chain diversification.
“There is enormous emphasis on manufacturing and ‘Make in India’ today. Companies are setting up semiconductor and microprocessor plants, among other things. This creates a huge opportunity for SMEs,” said Deena Mehta, general partner and investment director at Himalaya Wealth Managers.
Founded this year, the firm is led by Deena Mehta, Manohar Lal Vij, Asit C. Mehta and Jatin Tehri. With the new platform, Deena Mehta and Asit Mehta are expanding beyond their traditional broking and capital markets businesses into wealth and alternative asset management.
Himalaya plans to invest ₹25-40 crore per company, targeting businesses with revenues between ₹100 crore and ₹500 crore.
Funding gap
“The challenge is that SMEs often do not get sufficient debt funding because they lack collateral or assets,” Deena Mehta said. “Many of these are already operational companies that have solved their business challenges and are ready to scale, but they lack growth capital. That is the gap we want to address.”
The fund will focus on sectors benefiting from India’s manufacturing push and is positioning itself as a private equity-style growth investor rather than a venture capital fund.
“We are definitely not a VC fund,” said Tehri, sponsor at Himalaya Wealth Managers LLP. “We are not investing in companies that are purely in the research and development phase. We are looking for established businesses with revenues and profitability that need growth capital.”
“If we invest ₹25-40 crore into a company, banks may then be willing to lend three to four times that amount. So effectively, our equity helps unlock much larger funding for SMEs,” Tehri added.
The executives said the ₹25-40 crore investment segment remains underserved in India’s SME ecosystem, where investors either deploy smaller venture-style cheques or much larger private equity investments.
“SMEs contribute more than 40% to India’s GDP, but equity funding flowing into SMEs is extremely limited,” Deena Mehta said. “The ₹25-40 crore ticket size segment remains underserved, and that is the gap we want to fill.”
The firm said it has begun discussions with family offices, government institutions and ultra-high-net-worth individuals for fundraising, with a first close expected within six months to a year. It is also evaluating five to six investment opportunities across healthcare, industrial automation and financial services.
“We ideally want to be the first institutional investor,” Tehri said, adding that the fund would look to back companies before valuations rise significantly through multiple rounds of fundraising.
Apart from capital, Himalaya plans to support portfolio companies with governance and operational guidance through a network of sector specialists and advisors.
Investor interest
“For a long time, institutional capital in India chased a relatively narrow band of assets — listed large-caps, venture-backed startups, or real estate. Investors are now moving beyond the usual names and betting on India's smaller, unlisted companies, particularly in sectors like precision manufacturing, defence components, and industrial automation,” said Kanika Sachdeva, partner at CMS INDUSLAW.
Sachdeva added that government policy has given certain small businesses a reliable customer base. “These companies now have order books that investors can actually rely on,” she said.
However, she cautioned that governance and liquidity challenges continue to remain significant hurdles for institutional investors in the SME ecosystem.
“Many SMEs are founder-led, family-controlled businesses where informal practices — related-party transactions, intermingling of personal and business finances, and limited board oversight — are the norm rather than the exception,” Sachdeva said. “Pre-IPO, the secondary market for unlisted SME equity is largely illiquid.”
Tehri said the firm also aims to support portfolio companies beyond capital infusion. “We can help them attract strategic investors later or even prepare for an IPO, whether on the SME exchange or the main board,” he said.