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Stakeboat's second fund eyes control-oriented deals, scaled up firms

Chandrasekar Kandasamy, managing partner at Stakeboat
Chandrasekar Kandasamy, managing partner at Stakeboat

Summary

Stakeboat Capital's second fund will focus on control oriented deals, with 40% of transactions executed independently or in collaboration with investors.

New Delhi: Mid-market private equity firm Stakeboat Capital, which recently marked the final close of its second fund with oversubscription, is likely to see a shift towards more control oriented deals through its new vehicle, besides ticket size going up and also considering change in criteria to choose target firms.

The homegrown PE fund which had struck most of the deals with a co-investment focussed strategy is now looking actively at control oriented deals on their own or with its limited partners (LPs), a top fund executive said.

“In Fund I, due to the relatively modest size of our fund, all our transactions operated under the co-control model. In our Fund II, we anticipate a shift, with approximately 40% of our transactions now following a control strategy executed independently or in collaboration with our investors," said Chandrasekar Kandasamy, managing partner at Stakeboat.

The fund, as per Kandasamy, will write bigger cheques given the larger corpus of this latest vehicle.

“This transition is accompanied by an expansion in deal sizes, with Fund II transactions ranging from 50-300 crore, an increase from the 15-50 crore range observed in Fund I," he said.

The fund managers will now primarily look at more matured, scalable companies with a focus towards profitability as a key factor for evaluation of a company. “We are now focusing on entities with revenues ranging from 80-100 crore and a prerequisite of profitability," Kandasamy said.

The PE fund, however, has decided to evaluate more sub-sectors within its three core areas of investment. The fund has mostly dealt with investments in healthcare, industrials and manufacturing, and B2B. “Within these three large sectors, we have identified more than 70 distinct sub sectors where we will pursue potential opportunities."

Within the healthcare sector, the fund is likely to bet on multi-specialty or single-specialty areas, equipment and consumables, information technology, wellness, diagnostics, analytics, and other allied services. In B2B space, it would be looking at niche IT services, knowledge process outsourcing (KPOs), software products and subscription-based services, among others.

The fund will now be working closely with the founders on various aspects of the business. It will engage in facilitating transformation through professional management, implementation of robust processes and systems, focus on technology integration, and strategic add-on acquisitions.

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