Exclusive: The US and India-based Lighthouse Funds has made the first closing of its $125 million or Rs 500 crore fund targeted at Indian mid-market companies. The Mauritius registered fund, named India 2020 Ltd, has already crossed Rs 400 crore in commitment, while the remaining Rs 100 crore will be raised in the next few weeks, Mukund Krishnaswamy, Co-founder and Managing Director of Lighthouse Funds, told VC Circle in an interview.

Lighthouse has also roped in private equity heavyweight Brian Larcombe as a director on India 2020 Ltd. Larcombe was former global CEO of UK-based 3i Group, an LSE-listed private equity fund with about $12 billion of own assets and a further $10 billion of third party assets. Larcombe’s addition is expected to help the fund move into the big league. The fund raising has been a breeze for Lighthouse, according to Krishnaswamy, who has earlier worked in the Private Equity Division of Lehman Brothers in New York. They raised the last $80 million, which was the first institutional money to get into the fund, from investors in Europe, US and Middle East, besides HNIs.


Mid-market focus

Lighthouse, set up in the US in 2001 by Krishnaswamy and W. Sean Sovak, has been investing in India since 2006. It has already committed close to $30 million in six companies (see table) in the Indian mid-market copanies, its primary focus areas, in the last two years. These companies belong to manufacturing, hospitality, media and foods. Lighthouses’s sweetspot is $4-10 million, a space largely neglected by funds in India.

Lighthouse will probably compete with only a few private equity funds in this segment such as Gaja Capital Partners, Zephyr Peacock or a BTS India Private Equity as most of the other private equity funds are targeting larger deals - upwards of $15 million. “We see tremendous opportunity in the mid-market space,” says W. Sean Sovak, Managing Director, who moved to India three years ago. He also serves on the boards of ethnic retailer FabIndia.

Krishnaswamy said the fund is looking at companies across the sectors, however, he named some like education, food processing, manufacturing, logistics and healthcare as special focus areas. “I like buying businesses at decent multiples. Now there are lots of opportunities available,” he said. They plan to close six more deals by March 2009, and by then they would have exhausted almost 50% of the funds.

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