Zephyr Management LP is is raising its second India-dedicated fund, Zephyr Peacock India Fund II, with a target amount of $75 million. The fund is looking to make equity and equity-related investments in growth capital opportunities in small and medium enterprise (SMEs).
Zephyr Peacock India Fund II has applied to International Finance Corporation (IFC), the private investment arm of World Bank, to raise $15 million or 20% of the commitments for the fund, whichever is lesser.
Kartik Parija, Managing Director, Zephyr Peacock, could not be reached for comments.
IFC has backed several Indian SME focused private equity funds. It recently invested in Avigo Capital Partners third fund, which in February achieved first close of its third fund. It has also invested in $100 million Ambit Pragma Fund.
Zephyr Peacock’s second fund is looking at opportunities, especially in SMEs in Tier II, Tier III cities and rural India. This comes at a time when LPs are looking at funds investing in the rural sector opportunities, a relatively underserved segment of the market. Till now private equity funds in India have mainly focused on opportunities focusing on urban consumer spending.
Zephyr Peacock, based out of Bangalore and New York, has made four investments from its first fund – Time Technoplant (polymer products firm), WLC India (a vocational training provider), Maxop Engineering (die-casting firm) and Miles Software (a financial software firm). The first fund has now been closed. Zephyr Peacock has a strategy to take influential minority positions by investing $5 to $20 million.
Zephyr Management has $1.4 billion under management and has funds across emerging markets like Latin America, Africa and Eastern Europe. IFC has invested in earlier Zephyr funds in the Latin American and Africa regions.