TVS Capital Funds raises Rs 832 crore, towards first close of its third fund

Private equity fund manager TVS Capital Funds has achieved the first close of Rs 832 crore for its latest fund – TVS Shriram Growth Fund 3 – completely from domestic investors. The fund is jointly sponsored by the TVS group and the Shriram group.

TVS Capital Funds is led by Gopal Srinivasan, a third generation entrepreneur from the TVS group and D Sundaram, former vice-chairman and chief financial officer of Hindustan Unilever. The sponsors have invested over Rs 200 crore in the fund, a statement from the fund said.

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TVS Capital has invested in companies such as National Stock Exchange of India, Indian Energy Exchange, RBL Bank, City Union Bank, Wonderla Holidays and Nykaa.com.

With the first close of its third fund, the total capital raised by TVS Capital has exceeded Rs 2,000 crore, the statement said. TVS Capital raised its first fund of Rs 600 crore in 2009, followed by a second of Rs 600 crore in 2012.

The commitments for the first close of the latest fund are entirely from local investors.

“We prefer not to raise capital from foreign investors. We have a harmonious set of family offices and institutional investors who understand India well,” said Srinivasan, adding that the firm newshas raised around Rs 500 crore from family offices and ultra high net-worth individuals (UHNI).

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The strong interest from family offices was because of the co-investment programme, which entitles these family offices to invest directly into companies, alongside the fund, said Srinivasan.

The fund is in the final stage of issuing its first term sheet and expects to make its first investment by the year end.

TVS Capital is targeting a final close of around Rs 1,200 crore for the third fund. The firm expects to receive additional commitments of Rs 200 crore from its existing pipeline of clients.

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According to Srinivasan the investment strategy will continue to remain the same and the fund will continue to focus on investing in late stage venture and late stage growth opportunities. The fund will also look at control transactions through platforms.

It would come in at the growth stage, but write larger cheques of Rs 50-150 crore for a venture, with the sweetspot being Rs 100-150 crore. It would do a couple of deals of Rs 200-300 crore along with co-investors. In the second fund, the private equity fund invested Rs 30-85 crore in growth stage companies.

Srinivasan said the investment appetite continued to be excellent, with good opportunities in the sectors it would focus on. TVS Capital Funds would invest in consumption-driven themes in financial services, food and lifestyle sectors.

From a sector perspective, the fund will focus largely on financial services and consumption themes such as food and lifestyle, he said.

“In consumption, we will look at largely food and then lifestyle. We see a large play of disruption because the whole industry is moving from unorganized to organized. So, food is a big area for us,” said Srinivasan.

Apart from investments, the firm has also been working on exiting its investments and returning capital to its investors.

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