TVS Shriram Growth Fund, a private equity fund floated by the TVS Group family and the Shriram Transport Finance group, has announced the raising of Rs 500 crore for investing in growth stage businesses. The fund was launched late last year, probably the first of the block from family business houses to launch a PE fund.
TVS Shriram Growth Fund is registered with SEBI under the Venture Capital Funds regulations, and is managed by TVS Capital Funds Ltd, an asset management company founded by Gopal Srinivasan of TVS Group.
The sponsors of the fund are the TVS Group and Shriram Group, which is actually the first instance of coming together of the two Chennai-based business groups. TVS is present in two-wheeler, auto components and finance business. The Shriram group is present in commercial vehicle finance (they recently celebrated their 30th anniversary), consumer finance, and engineering and construction businesses.
R. Thyagarajan, founder of Shriram Group, said, “The TVS Group and Shriram Group share a similar vision and passion for nurturing entrepreneurship in mid-cap businesses from across India, and we are very excited about the partnership to launch this private equity fund.”
Gopal Srinivasan, Chairman and Managing Director, TVS Capital Funds Ltd, said, “We are really excited as we have been able to raise this capital during difficult capital markets environment, which reinforces the investor’s trust in the TVS Group and Shriram Group…Historically, private equity funds that have started during market downturns have outperformed funds that have invested in bull market years.”
The Fund’s FocusThe fund will make investments in the range of Rs 10 crore ($2.5 million) to Rs 50 crore ($12.5 million) in mid-cap companies with revenues of Rs 30 crore to Rs. 250 crore ($7.5 million to $62.5 million). The fund’s focus will be consumption-led sectors such as health care delivery, privatised education, hospitality, speciality retail, food & agro, and consumer media and entertainment. They will look at deals from emerging Tier II, III cities and metros. The fund’s strategy is to acquire significant minority stake with active participation on the board.
For example, media & entertainment sector is estimated to be Rs. 50,000 crore approximately and is growing at 18% CAGR , and organised retail is estimated to be Rs. 75,000 crore and
is growing at over 50% CAGR. The fund will focus on sub-sectors that have a developmental theme, such as organising an unorganised sector, offering high quality products and increased choices to consumers or development of the entrepreneur and enterprise. The fund believes that providing growth capital to these opportunities can lead to disruptive growth and produce high returns.
Suresh Raju, Executive Director, said, “With a large and growing consumer base, rising incomes and changing lifestyles, India is expected to become the world’s 5th largest consumer market over the next couple of decades, and this fund is designed to tap this opportunity. Nearing completion of the first milestone of mobilising the Rs 500 crore of capital, the focus has shifted to investing in 6 to 8 companies over the next 12 months, targeting opportunities primarily in Tamil Nadu, Andhra Pradesh, Karnataka, Kerala, Maharashtra, Gujarat and National Capital Region (greater Delhi area).”
TVS Capital Funds Ltd has Gopal Srinivasan as Chairman & Managing Director, Suresh Raju, a former investment banker, as Executive Director, besides a Principal, a Controller & Risk Manager, and three associates/analysts.