Homegrown private equity firm TVS Capital Funds has made a final close of its new rupee-capital fund on the back of significant demand from institutional investors in the last quarter of 2020, according to a spokesperson.
The final closure, which comes two years after the first closure in late 2018, has marginally overshot its target corpus of Rs 1,500 crore including the greenshoe option.
“We have raised Rs 1,550 crore ($205 million) in the blind pool with a potential co-investment pool of Rs 450 crore, taking the total AUM (asset under management) for the fund to Rs 2,000 crore ($272 million). This marks TVS Capital Funds as the largest rupee-only capital fund, only through domestic sources,’’ said KI Mani, senior adviser to TVS Capital Funds.
The sweet spot for the third fund is Rs 125-150 crore. It can do deals worth Rs 300 crore with co-investment pool.
Some of the investors in the fund include development finance institutions (DFIs) and insurance companies such as SIDBI, NABARD, HDFC Life, SBI Life, Bajaj Allianz, and New India Assurance, which account for 22% of the fund by commitment.
Mani added that about 26% of the commitments come from ultra HNIs, who include several professionals.
Like previous funds, all the LPs in this vehicle are domestic investors. This is in line with the investment firm’s "designed-for-India strategy".
The average commitment from each LP was around Rs 7.5 crore with the sponsor groups -- TVS and Shriram -- investing 7% of the fund’s corpus. The fund tapped over 200 investors for the total corpus.
Mani said that new family offices, which typically invest around Rs 15 crore, had shown a lot of interest in the fund and had increased the cheque size to Rs 20 crore while the average ticket size for DFI is about Rs 25 crore.
About 45% of the contribution to the fund came from 34 leading family offices with individual contributions of more than Rs 10.
Mani added that TVS Capital has formed a friends-of-the-fund strategy comprising individual investors who are tech leaders in their respective fields, to sharpen focus on tech investments.
These investors include Kris Gopalakrishnan, Lakshmi Narayanan, Krishnakumar Natarajan, and N Chandrasekaran.
In its previous outing, the fund raised $139 million for TVS Shriram Growth Fund 1A in 2008 and Rs 585 crore for TVS Shriram Growth Fund 1B in 2011.
The second fund has reported a distribution to paid-in (DPI) of 1.x and a total value of paid-in capital of 2x.
DPI is a measure of cumulative investment returned to the investors.
About 56% of clients have booked returns between 15.6% and 17.6%.
The firm is also looking to launch its fourth fund in two years.
Some of the investments from the current fund include Suryoday Small Finance Bank, Leap IndiaPvt Ltd, GoDigit General Insurance Ltd, and DCB Bank. It has invested about Rs 400 crore; 25% of it through the co-investment programme.
Its focus sector includes financial services, B2B services, and niche consumer.
Exits include Indian Energy Exchange (2.3x) and National Stock Exchange (3.7x). The fund is also in the process of exiting Prabhat Dairy