Avigo Capital Partners, a Delhi-based private equity fund focused on mid-market companies, has closed its third fund, Avigo SME Fund III, at $240 million. Avigo SME Fund III, which made its first close of $165 million in May 2009, has already made two investments totaling over $27 million including one in the emerging oil & gas sector.
The PE firm has invested $14 million in Delhi-based Naftogaz India Private Ltd, an EPC player in the oil & gas sector and the rest in a digital media company (whose identity could not be ascertained).
Speaking to VCCircle, Achal Ghai (in pic), Managing Partner, Avigo Capital Partners, said, “The focus areas of the third fund will be industrial services, manufacturing, infrastructure-related businesses and emerging sectors like digital media, telecom services and specialised retail. We are evaluating a number of deals in the energy sector, which accounted for over half the investments made from the last fund.”
Avigo’s $125-million last fund, Avigo SME Fund II, which was raised in 2007, is fully invested and has started distributions to its investors. The PE firm was one of the first players in India to focus on the small and medium enterprises, with investments concentrated in the industrial and manufacturing space. Several players like Zephyr Peacock, Aureos Capital, BTS India and recent entrants like ICICI Bank's $100 million Emerging India Fund and Forum Synergies are looking at space.
Some of the companies in Avigo's portfolio include flexible metallic hose manufacturer Aeroflex, material handling company Tecpro Systems, packaging firm Bharat Box Factory and turnkey services provider Get Engineering and Construction. It has also invested outside manufacturing and industrial space in firms like fashion retailer Spykar and e-governance services player Comat Technologies.
The largest investment of Fund II has been in Tecpro Systems Limited, which has filed the DRHP for an IPO on April 28 and is likely to hit the market by September 2010.
All the large institutional investors in Fund II increased their investments in Fund III. In addition to that, seven new major institutions from the UK, Europe, US, Japan, Hong Kong and Australia
are new LPs in the fund, he added.
As VCCircle reported, the third fund saw seven lead investors. All the existing limited partners (LPs) of the second fund--which include Honk Kong’s Squadron Capital, UK’s CDC Group, Australia's Aria Pension Fund (represented by Macquarie, Hong Kong), IFC and Export Development Canada--have invested in this fund. The fund has two new institutional investors –US-based Siguler Guff and UK’s PPM (Prudential Portfolio Managers). While the existing investors have put $100 million in the fund, the balance $50 million has been raised from new investors.
Avigo plans to invest in 12-14 companies from the new fund, and looks to increase the deal ticket sizes from earlier $5-7 million to $7-10 million. Avigo, which has a 16-member team, plans to add two more members to the Mumbai team, VCCircle had reported. Earlier this year it appointed S Harikrishnan as investment director at Avigo’s Mumbai office.
Avigo Capital Partners was formed in 2003 with a focus on PE investments in the SME sector in India by Ghai and Vivek Subramanian, a partner at Avigo. The PE firm has over $365 million under management through more than 25 investments in over 15 companies. It has also achieved full or partial exits from six of its portfolio companies. Its first SME Fund I of $10 million invested in Privi Organics Ltd and Rinac India Ltd. Its second fund invested in Comat Technologies,
Spykar and Tecpro Systems Ltd.