TVS Capital Funds on Tuesday announced the second close of ₹1,100 crore for its third private equity fund, raised solely from domestic investors.
TVS Shriram Growth Fund 3, which is jointly sponsored by the TVS Group and the Shriram Group, has a target corpus of ₹1,000 crore, with a green-shoe option of ₹500 crore.
Of the green-shoe option, the fund got subscriptions worth ₹100 crore and expected commitments worth another ₹150 crore in the near future, it said. The fund had reached the first close of ₹832 crore in October.
“We have remained pragmatic in selecting investments opportunities across stages, venture growth, classic growth with control investing wherever possible, and late stage growth. As markets have developed, early stage investments have ideally been replaced by venture growth, which is also a part of our strategy as we look to back experienced entrepreneurs," said Gopal Srinivasan, managing director and chairman, TVS Capital Funds.
“The fund would focus on sectors such as financial services, business services, and niche consumption segments," he said.
The fund, which was founded in 2007 by Srinivasan, a third generation entrepreneur from the TVS Group, was later joined by D. Sundaram, former vice-chairman and chief financial officer of Hindustan Unilever Ltd.
The latest fund raise pegs TVS Capital’s cumulative assets under management at ₹1,664 crore, making it one of the larger managers of rupee denominated mid-market growth private equity capital in India. Most of its limited partners are Indian family offices, high net-worth individuals, and financial institutions and developmental financial institutions of the government.
“The sponsors and the sponsor group have committed about 20% of the target corpus. Similar commitments have been received from domestic financial institutions. Family offices have shown significant interest and an extremely positive response committing about ₹700 crore in the fund," said Srinivasan.
So far, the third fund has already deployed 13% of its target corpus of ₹ 1,000 crore with an investment of ₹100 crore in LEAP India, a supply chain solutions provider to logistics firms, and ₹30 crore in Mumbai-based Suryoday Small Finance Bank.
The PE firm raised its first fund of ₹600 crore in 2009, followed by a second of ₹600 crore in 2012. The firm has completely exited the investments made out of its first fund, but has reached the halfway mark on exits from the second fund.
From the second fund, it had made investments in the National Stock Exchange of India Ltd, Indian Energy Exchange Ltd, RBL Bank Ltd, City Union Bank Ltd, Wonderla Holidays Ltd, and Nykaa.com.
With four completed exits, the second fund has been able to return the entire original capital back to its investors, while making nearly six times returns in its most recent exit from Nykaa, a popular online and omnichannel beauty products platform.
“The second fund is on course to return a two times multiple on the invested capital to its clients partners. We aim to implement learnings from our second fund and build on the success of Fund 2 to make even better returns for our client partners," said Srinivasan.