Kedaara Capital ups second fund target, gets new offshore LP on board
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Private equity firm Kedaara Capital has scaled up the target corpus for its second fund, which could make it one of the largest-ever sector-agnostic PE funds raised to invest in India, two persons privy to the development told VCCircle.

The private equity firm, which was founded in 2011, had overshot the target corpus for its first fund by raising $540 million from Canadian fund Ontario Teachers’ Pension Plan, which was the anchor investor, and other sovereign funds, pension funds, family offices, fund of funds and endowments.

It was earlier reportedly aiming to scoop up $600-650 million in its second outing, tapping into both domestic and offshore investors.

But the persons cited earlier said that the firm has scaled this up and is now targeting $700 million. “It will be a single close,” one of the persons said, referring to the conventional fundraising process.

Many alternative investment funds refer to interim fundraising milestones as first close, second close and so on before the final close, after which the investment firm stops soliciting investors’ money. Interim closures allow a PE firm to start deploying the cash it has garnered even before raising the full targeted corpus. An interim close is typically done when the fundraising process is stretched.

The PE firm recently added a new offshore limited partner (LP) for the second fund. “Kedaara Capital has received commitment of up to $10 million (Rs 64 crore) from Portfolio Advisors LLC, a US-based private markets-focused investment firm, for the new fund,” the second person cited earlier said.

Portfolio Advisors, which has held an exposure in India for over a decade, has more than $37 billion of assets under management.

The firm provides a full range of private equity, private debt and private real estate investment advisory and portfolio management services to its investor base of more than 1,100 LPs. It claims to have a global footprint, with more than 90 employees across its offices in Connecticut, Zurich and Hong Kong.

Early this year, speaking on the sidelines of VCCircle’s flagship LP Summit in Mumbai, Michael Liu, senior vice president of Portfolio Advisors, had said that the investment firm prefers to bet on sector-agnostic funds instead of sector-focused funds in India.

When contacted, Kedaara’s managing partner Manish Kejriwal and Portfolio Advisors' Liu declined to comment on the development.

Kedaara also received a commitment of up to $40 million (Rs 258.6 crore) from International Finance Corporation, the World Bank’s private-sector investment arm, in May this year. IFC is an active LP in several Indian funds and also makes direct investments in the country.

IFC had previously disclosed that Kedaara’s second fund seeks to invest across 10-12 mid-market companies in India. Its target sectors include logistics, packaging, specialty chemicals and ingredients, pharmaceuticals and finance.

Kedaara Capital

The private equity firm was founded by Manish Kejriwal, former India head of Singapore state investment fund Temasek, and Sunish Sharma and Nishant Sharma—who were managing director and principal, respectively, at global private equity firm General Atlantic in India.

It has backed a total of eight firms, according to VCCEdge, the data research platform of VCCircle.

Kedaara Capital’s latest investment was in Hyderabad-based microlender Spandana Sphoorty.

The PE firm has also been active on exits. In September last year, Kedaara struck its second exit from a fairly young portfolio firm when it sold part of its holding in automotive components maker Bill Forge Pvt. Ltd to Mahindra CIE Automotive Ltd.

Early this month, its portfolio company Mahindra Logistics filed its papers with capital markets regulator the Securities and Exchange Board of India (SEBI) for an initial public offering. Kedaara is looking to make a partial exit in the IPO.

Prior to this, Kedaara Capital had sold part of its holding in AU Financiers India Ltd to high-net-worth individuals, insurance companies and family offices, marking a quick partial exit.

Fundraising by PE firms

If Kedaara manages to hit the $700-million target, its second fund would become the fourth-largest sector-agnostic conventional PE fund ever raised for India.

ChrysCapital had raised a record $1.25 billion for its fifth fund at the peak of last bull run, but later scaled it down to $950 million. It remains the single-largest India-dedicated private equity fund raised to date, excluding infra funds raised by 3i, IDFC and ICICI Venture-Tata Power besides special situations fund under AION Capital (Apollo Global and ICICI Venture).

In 2015, Everstone raised $730 million and True North (earlier India Value Fund Advisors) scooped up $700 million for their new funds.

Earlier this year, homegrown PE firm ChrysCapital Management Co overshot the $600-million target for its seventh fund.

Last year, Multiples Alternate Asset Management Pvt. Ltd wrapped up the fundraising process for its second fund to raise the fifth-largest sector-agnostic private equity investment corpus ever raised for India.

These apart, WestBridge topped its evergreen PE fund to take its overall corpus to $1.55 billion early this year. Last December, Fairfax India Holding Corporation, part of India-born Canadian billionaire Prem Watsa’s Fairfax Financial Holdings Ltd, raised $500 million to take its overall corpus to $1.5 billion.

A number of private equity firms have successfully closed their fundraising process in the past months while some are on the road.

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