Madison India raises fourth PE fund; former Providian CEO joins as operating partner
Photo Credit: Akshansh Maan/VCCircle

Private equity firm Madison India Capital Advisors Pvt. Ltd has achieved the final close of its fourth fund, Madison India Opportunities IV, at $230 million (about Rs 1,480 crore), it said in a press statement.

VCCircle was the first to report last year that Madison was back on the road to raise its new mid-market fund that will primarily back firms in the consumer, business services, technology and financial services industries.

The PE firm has also roped in Shailesh Mehta, former chief executive of American credit card issuer Providian, as operating partner. Mehta has also served Aptus Value Housing Finance, Safari Industries Ltd, and Manappuram Finance in the past.

The milestone is significant since this is perhaps the first time the Delhi-based PE firm has managed to raise the planned amount. It had first approached investors to raise its maiden fund back in 2008, when it was eyeing up to $150 million.

Later, it had floated two new investment entities with an aim to garner $60 million. Though the PE firm never made a formal announcement regarding the quantum of the fund-raise, given its publicly-known portfolio basket and the size of investments, it is unlikely to have raised the amount it sought.

Madison India Capital makes investments ranging from $5 million to $20 million, with co-investments with limited partners going up to $50 million, according to its website. The PE firm targets mid-market growth companies, which typically have an enterprise value of $10-100 million. It is expected to back at least 10 firms from the new fund.

Previous bets

The PE firm has a portfolio of around half-a-dozen companies, including an Internet venture in South Korea.

Madison India Capital started investing in 2009. Its debut investment was in Pipetel Communications Pvt. Ltd, an enterprise access firm providing broadband services to small and micro enterprises. It had picked up a 24% stake in the firm for Rs 2.1 crore, according to VCCEdge, the data research platform of News Corp VCCircle. Granite Hill India Opportunities Fund was a co-investor.

The same year, Madison invested in listed firm Net 4 India Ltd, a data centre, cloud hosting and network services provider. Two years later, Net 4 acquired Pipetel in a deal where Madison and Granite Hill exited.

That remains the only known exit for Madison to date. The PE firm’s investment in Net 4 is in deep unrealised loss.

However, it is likely to make up for it with profits from handset maker Micromax Informatics Ltd. Madison had picked up a small stake in Micromax in 2010, co-investing with Sequoia Capital and Sandstone Capital in a deal where the promoters sold a small portion of their shares.

In 2014, it invested in Gurgaon- and New York-based iYogi Technical Services Pvt. Ltd, a provider of remote and on-site tech support services. Last year, it picked up a stake in Indian Energy Exchange Ltd.

Fund-raising climate

Early this year, PE firm ChrysCap marked the final close of its seventh fund at over $600 million. WestBridge Capital added $575 million to its evergreen fund last year, taking its committed capital to $1.4 billion. This made it the single-largest running PE-styled investment fund dedicated to India.

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

IL&FS Investment Managers Ltd, one of the largest homegrown PE firms by assets under management, completed the fundraising process for its new sector-agnostic growth fund almost two years after hitting first close. The new fund, christened Tara India Fund IV, garnered $60 million (Rs 406 crore), a fraction of its predecessor Tara India Fund III under which the firm had raised $225 million in 2008.

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