Alternative assets manager Investcorp has closed its maiden India-focused private equity (PE) fund at ₹1,000 crore (around $150 million), senior executives said.
Bahrain-based Investcorp entered India earlier this year, when it acquired the private equity and real estate fund business of IDFC Alternatives. Investcorp’s maiden India fund is a top-up of IDFC Alternatives’ fourth PE fund, which managed to raised around $70 million before the acquisition by Investcorp. Investcorp is also managing the third PE fund raised by IDFC Alternatives.
“The fresh capital has more than doubled the fund size. The first close was at $70 million and we now have closed it at about $150 million," Rishi Kapoor, co-chief executive of Investcorp said.
Most of the fresh capital came from high-net worth individuals (HNIs) from the Gulf countries that have earlier been associated with Investcorp, along with domestic and international institutional investors, he said.
“The latest fundraise is coupled with all the additional capital that we would be able to provide from our own $2.5 billion balance sheet and from the global co-investors that we work with," he added.
The PE fund, which is mandated to focus on sectors such as consumer, financial services and healthcare, has already made four investments totalling ₹270 crore into Mumbai-based non-banking financial company (NBFC) InCred Financial Services Ltd; hospital chain of eye care hospitals ASG Eye Hospitals Pvt. Ltd; Bengaluru-based co-living and home rental startup Zolo Stays and New Delhi-based value apparel retail chain, Citykart Retail Pvt. Ltd.
“It is all about sustainable development in an inclusive, affordable, accessible fashion. From our perspective, that is the primary investment theme that we are backing in India because we see that as having a very long-term secular tailwind," said Kapoor.
“I see strong risk-adjusted returns if we follow that strategy and provide growth capital for mass market consumption," he added.
While financial services is a major theme for the fund, Investcorp will be cautious in making bets in the lending space, given the liquidity crunch that the sector has been facing since September after Infrastructure Leasing and Financial Services Ltd (IL&FS) defaulted on its debt payments.
“Even if financial services have given good returns in the past, it all depends upon the timing and right now, we are feeling that there are a lot of headwinds in the sector, so we will be very cautious," Girish Nadkarni, partner and co-head private equity at Investcorp India Asset Managers said.
“There are other parts of financial services space which are rather attractive at this point. For example, credit information agencies and loan distributors are an interesting way to participate in the credit growth story without taking any loan exposure," he added.
The fund also plans to increase its investments in the healthcare space where it is scouting for asset-light, single-specialty models that are scalable.
“We are looking to invest in companies that are deeply rooted in India in terms of distribution and can provide quality healthcare and infrastructure in tier 1 and 2 cities," said Gaurav Sharma, partner and co-head private equity, Investcorp India Asset Managers.
The average ticket size for investments would be about $15-50 million, with focus on backing first-generation entrepreneurs at the growth stage, said Sharma.
Investcorp manages assets worth $255 million across IDFC’s third and fourth PE funds. The third fund presently has assets under management (AUM) of approximately $103 million. It recently exited its in tower company ATC Telecom Infrastructure to majority shareholder American Tower Corp.
Investcorp also plans to launch a new India real estate fund by next year, Kapoor said.
Over a medium term, Investcorp plans to increase the AUM of its Indian funds to $1.5 billion, he said. “We are looking at $500 million increase on the real estate side and $500 million on the private equity side," said Kapoor.