TVS Capital's biggest fund yet could bet on ‘zero-stage’ startups

Gopal Srinivasan, chairman of TVS Capital.
Gopal Srinivasan, chairman of TVS Capital.


TVS Capital's fourth fund has raised 1,700 crore so far and plans to announce its first close next month

MUMBAI : TVS Capital has raised 1,700 crore in domestic money for its largest fund yet, its fourth, in a sign of growing interest among Indian investors for private equity as an asset class.

The Chennai-based investor intends to announce the first close for its new fund next month and will look to bet on ‘zero-stage’ companies, which involves backing professionals or entrepreneurs launching new startups, said a person familiar with the company’s plans.

The fourth fund will have a total corpus of 3,000 crore, surpassing the size of TVS Capital’s 1,600-crore third fund.

First close is an investing milestone after which private equity and venture capital firms can start investing. TVS Capital received approval for its fourth fund from the Securities and Exchange Board of India in January.

“The firm may back promising individuals who have demonstrated execution capacity and are looking to start afresh," the person mentioned above said, requesting anonymity.

TVS Capital will continue placing concentrated bets on financial services companies and startups catering to other businesses. About 70% of the fourth fund’s portfolio will be financial services companies, and the rest business-to-business startups, this person said.

“These are areas where the firm has developed deep sector expertise in," he said.

TVS Capital has invested in multiple fintech startups from its third fund. Among these are Digit Insurance, Insurance Dekho, Five Star Business Finance, Suryoday Small Finance Bank, DCB Ltd, Yubi (formerly CredAvenue), and PhonePe. The firm also backed supply chain solutions provider Leap India from its third fund.

TVS Capital has since sold its stake in Suryoday, DCB, and Leap, and made a partial exit from Five Star Business Finance.

“TVS Capital has fully exited funds 1 and 2, and made several exits from fund 3," the person cited above said.

TVS Capital declined to comment on plans for its fourth fund.

In recent years, TVS Capital has been strengthening its core leadership team. In January last year, it appointed former McKinsey executive Naveen Unni and former Accenture executive Krishna Ramachandran as managing partners, and in December named e-commerce veteran Kal Raman as an adviser. 

Earlier in October 2022, TVS Capital appointed Anuradha Ramachandran from Flourish Ventures as managing partner for investments. 

Apart from these, in November TVS Capital onboarded Ramesh Iyer, managing director and vice chairman of Mahindra Finance Ltd, as a board member.

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