Peepul Capital, a Chennai and Hyderabad based private equity fund, has raised a little under $320 million for its third fund. The private equity fund has exceeded its target of $300 million and closed the fund somewhere around $312 million, sources close to the development told VCCircle.

The fund has drawn commitments from institutional investors in the US and Europe. What is interesting is the fund did not go in for multiple closes - unlike many funds - but made one close as its final one.

When contacted for comments, Sandeep Reddy, Managing Director & co-founder, Peepul Capital said, "We don't comment on fund raising." 

Founded in 2000, Peepul began its operations with a fund size of $110 million and raised its second fund of $214 million in 2005. With the closing of the latest fund, Peepul’s assets under management are close to now $ 625 million. 

Peepul's close is significant as the fund raising environment is yet to come back to the golden days of pre-2008. Only those funds with excellent exit track records or managers with significant PE    experience have been able to raise capital. Some of the recently concluded fund raises include Multiples of Renuka Ramnath (announced a first close of $250 million) and CX Partners of Ajay Relan (final close of $515 million).

Others are Avigo Capital Partners, which closed its third fund at $240 million, Ascent India Capital Advisors, which raised $350 million and Aditya Birla Capital Advisors, which raised Rs 675 crore.

What has helped Peepul is its exit track record, its regional orientation, and an easily digestible fund target of $300 million. The PE firm sold its 26% stake in Hyderabad-based IT offshoring firm Intelligroup to Japan's NTT Data Corporation for $200 million in June this year. Venture Tech (an investment vehicle of iLabs), along with SAIF Partners, had invested a total of $25 million for a majority stake of around 63%.

Also, Chennai-based Unifi Capital, which has AUM of more than $80M, bought back Peepul Capital's 20% stake recently this year. The PE firm made about 7X returns on its investment.

It has invested in about 29 companies till now. Some of its investments between the two funds include $13 million in Aqua Designs India Pvt. Ltd. (environmental & facilities services), $10 million in TeleDNA Communications Pvt. Ltd  (application software), $21.5 million in UniverCell Telecommunications India Pvt. Ltd. (computer & electronics Retail ), and $1.8 million in Megasoft Ltd. (IT consulting & other services).

The other portfolio companies include DQ Entertainment International Ltd (movies & entertainment), MedPlus Health Services Pvt. Ltd. (speciality stores) and Kam-Avida Enviro Engineers Pvt. Ltd. (environmental & facilities services).

Peepul had also invested in Metlife India Insurance Company in 2001. It also recently partnered with Europe’s largest loyalty programme player Payback Gmbh to buy a majority stake in loyalty card provider i-mint.

Peepul Capital usually commits $15 million to $25 million of equity in each transaction, and is skewed more towards expansion-stage and restructuring/buyout opportunities. The fund, which believes that “people skills” are an important value driver, comes as an active business partner in its portfolio companies. This entails being a significant shareholder, often a majority partner.  Souces added that a significant portion of the latest fund will also be deployed for such opportunities.

A majority of the fund’s portfolio investments are oriented to the southern region of India in order to better leverage the Peepul Capital presence, networks and experience, given the significant    levels of execution risk involved at growth stage.

According to Preqin, about 17 funds focusing on Asia and the Rest of World region gathered a total of $9 billion. Early trends indicate that while the fund-raising sentiment may have improved, the environment is still beset with challenges.

But, there is a significant improvement from last year when LPs or investors shied away from new investments and were only doing follow-on funding. There are a host of funds which are currently out on road which include IDFC real estate fund, ICICI offshore tranche, BTS cleantech fund, BCP Advisors, Everstone Capital, Blue River capital, and Subbu Subramaniam's MCap Advisors among others.

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